Running at a loss can be a red flag. Many of these businesses face mounting challenges as competition increases and funding becomes harder to secure.
Unprofitable companies face an uphill battle, but not all are created equal. Luckily for you, StockStory is here to separate the promising ones from the weak. Keeping that in mind, here is one unprofitable company with the potential to become an industry leader and two best left off your radar.
Two Stocks to Sell:
Optimum Communications (OPTU)
Trailing 12-Month GAAP Operating Margin: -33.1%
Based in Long Island City, Optimum Communications (NYSE: OPTU) is a telecommunications company offering cable, internet, telephone, and television services across the United States.
Why Should You Dump OPTU?
- Performance surrounding its broadband subscribers has lagged its peers
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- 8× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
At $0.83 per share, Optimum Communications trades at 0.1x forward price-to-sales. If you’re considering OPTU for your portfolio, see our FREE research report to learn more.
WEBTOON (WBTN)
Trailing 12-Month GAAP Operating Margin: -3.3%
Pioneering a vertical-scrolling format optimized for mobile devices, WEBTOON Entertainment (NASDAQ: WBTN) operates a global platform where creators publish serialized web-comics and web-novels that users can read in bite-sized episodes.
Why Does WBTN Give Us Pause?
- Number of monthly active users has disappointed over the past two years, indicating weak demand for its offerings
- Earnings per share fell by 73.5% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
WEBTOON is trading at $12.09 per share, or 110.4x forward P/E. Read our free research report to see why you should think twice about including WBTN in your portfolio.
One Stock to Buy:
Viper Energy (VNOM)
Trailing 12-Month GAAP Operating Margin: -2.5%
Operating a business model that requires no drilling rigs or production equipment of its own, Viper Energy (NASDAQ: VNOM) owns mineral and royalty interests in oil and gas properties, collecting revenue when operators extract resources from land.
Why Will VNOM Beat the Market?
- Market share has increased this cycle as its 36.8% annual revenue growth over the last ten years was exceptional
- Highly-profitable operating model results in strong unit economics and a best-in-class gross margin of 99.8%
- EBITDA margin expanded by 6.4 percentage points over the last five years as it scaled and became more efficient
Viper Energy’s stock price of $48.60 implies a valuation ratio of 18.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week - FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
