Unprofitable companies can burn through cash quickly, leaving investors exposed if they fail to turn things around. Without a clear path to profitability, these businesses risk running out of capital or relying on dilutive fundraising.
Finding the right unprofitable companies is difficult, which is why we started StockStory — to help you navigate the market. That said, here is one unprofitable company investing heavily to secure market share and two that could struggle to survive.
Two Stocks to Sell:
Opendoor (OPEN)
Trailing 12-Month GAAP Operating Margin: -9.9%
Founded by real estate guru Eric Wu, Opendoor (NASDAQ: OPEN) offers a technology-driven, convenient, and streamlined process to buy and sell homes.
Why Do We Avoid OPEN?
- Performance surrounding its homes sold has lagged its peers
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Unprofitable operations could lead to additional rounds of dilutive equity financing if the credit window closes
Opendoor is trading at $5.09 per share, or 233.2x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than OPEN.
ACV Auctions (ACVA)
Trailing 12-Month GAAP Operating Margin: -7.4%
Founded in 2014, ACV Auctions (NYSE: ACVA) is an online auction marketplace for car dealers and wholesalers to buy and sell used cars.
Why Are We Hesitant About ACVA?
- High servicing costs result in an inferior gross margin of 27.3% that must be offset through higher volumes
- Excessive marketing spend signals little organic demand and traction for its platform
ACV Auctions’s stock price of $6.36 implies a valuation ratio of 11x forward EV/EBITDA. If you’re considering ACVA for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
GitLab (GTLB)
Trailing 12-Month GAAP Operating Margin: -7.4%
With its all-remote workforce pioneering a new approach to software development, GitLab (NASDAQ: GTLB) provides a single-application DevSecOps platform that helps development, operations, and security teams collaborate to build, secure, and deploy software faster.
Why Are We Backing GTLB?
- Customers view its software as mission-critical to their operations as its ARR has averaged 26.4% growth over the last year
- 120% net revenue retention rate indicates success in expanding revenue within existing accounts
- Software is difficult to replicate at scale and results in a best-in-class gross margin of 87.4%
At $28.37 per share, GitLab trades at 4x forward price-to-sales. Is now the time to initiate a position? 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%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. 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 (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
