1 Unprofitable Stock with Impressive Fundamentals and 2 We Avoid
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.
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 that could struggle to survive.
Two Stocks to Sell:
Marqeta (MQ)
Trailing 12-Month GAAP Operating Margin: -1.9%
Powering the cards behind innovative fintech services like Block's Cash App, Marqeta (NASDAQ:MQ) provides a cloud-based platform that allows businesses to create customized payment card programs and process card transactions.
Why Are We Hesitant About MQ?
- Sales trends were unexciting over the last five years as its 11% annual growth was below the typical software company
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
- Free cash flow margin is forecasted to shrink by 8.9 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
Marqeta is trading at $17 per share, or 2.4x forward price-to-sales. Check out our free in-depth research report to learn more about why MQ doesn’t pass our bar.
Supernus Pharmaceuticals (SUPN)
Trailing 12-Month GAAP Operating Margin: -15.9%
With a diverse portfolio of eight FDA-approved medications targeting neurological conditions, Supernus Pharmaceuticals (NASDAQ:SUPN) develops and markets treatments for central nervous system disorders including epilepsy, ADHD, Parkinson's disease, and migraine.
Why Do We Think SUPN Will Underperform?
- Muted 6.5% annual revenue growth over the last five years shows its demand lagged behind its healthcare peers
- Subscale operations are evident in its revenue base of $822.8 million, meaning it has fewer distribution channels than its larger rivals
- 16.5 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Supernus Pharmaceuticals’s stock price of $43.99 implies a valuation ratio of 2.8x forward price-to-sales. If you’re considering SUPN for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Cloudflare (NET)
Trailing 12-Month GAAP Operating Margin: -14.1%
With a massive network spanning more than 310 cities in over 120 countries, Cloudflare (NYSE:NET) provides a global network that delivers security, performance and reliability services to protect websites, applications, and corporate networks.
Why Should You Buy NET?
- Billings have averaged 34.7% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
- Market share will likely rise over the next 12 months as its expected revenue growth of 29.6% is robust
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
At $352.70 per share, Cloudflare trades at 38.5x forward price-to-sales. Is now the right time to buy? See for yourself in our full research report, it’s free.
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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 Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.