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.
Finding the right unprofitable companies is difficult, which is why we started StockStory — to help you navigate the market. Keeping that in mind, here is one unprofitable company with the potential to become an industry leader and two that could struggle to survive.
Two Stocks to Sell:
Sprout Social (SPT)
Trailing 12-Month GAAP Operating Margin: -5.9%
Born from the recognition that businesses needed a centralized way to handle their growing social media presence, Sprout Social (NASDAQ:SPT) provides a comprehensive software platform that helps businesses manage, analyze, and optimize their presence across various social media networks.
Why Does SPT Fall Short?
- ARR growth averaged a weak 10.1% over the last year, suggesting that competition is pulling some attention away from its software
- Estimated sales growth of 5.3% for the next 12 months implies demand will slow from its two-year trend
- Suboptimal cost structure is highlighted by its history of operating margin losses
Sprout Social is trading at $10.80 per share, or 1.3x forward price-to-sales. Check out our free in-depth research report to learn more about why SPT doesn’t pass our bar.
Matthews (MATW)
Trailing 12-Month GAAP Operating Margin: -1%
Originally a death care company, Matthews International (NASDAQ:MATW) is a diversified company offering ceremonial services, brand solutions and industrial technologies.
Why Are We Out on MATW?
- Annual revenue declines of 7.4% over the last five years indicate problems with its market positioning
- Cash-burning history makes us doubt the long-term viability of its business model
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $20.01 per share, Matthews trades at 25.5x forward P/E. Dive into our free research report to see why there are better opportunities than MATW.
One Stock to Buy:
Lyft (LYFT)
Trailing 12-Month GAAP Operating Margin: -1.8%
Founded by Logan Green and John Zimmer as a long-distance intercity carpooling company Zimride, Lyft (NASDAQ: LYFT) operates a ridesharing network in the US and Canada.
What Makes LYFT Stand Out?
- Active Riders have grown by 13.7% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Additional sales over the last three years increased its profitability as the 70.4% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin expanded by 24.8 percentage points over the last few years, providing additional flexibility for investments and share buybacks/dividends
Lyft’s stock price of $15.31 implies a valuation ratio of 6.5x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.