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. Keeping that in mind, here is one unprofitable company that could turn today’s losses into long-term gains and two that may never reach the Promised Land.
Two Stocks to Sell:
Fiverr (FVRR)
Trailing 12-Month GAAP Operating Margin: -3%
Based in Tel Aviv, Fiverr (NYSE:FVRR) operates a fixed price global freelance marketplace for digital services.
Why Are We Hesitant About FVRR?
- Intense competition is diverting traffic from its platform as its active buyers fell by 9.4% annually
- Estimated sales growth of 5.4% for the next 12 months implies demand will slow from its three-year trend
- High marketing expenses suggest it needs to spend heavily on new customer acquisition to sustain momentum
At $15.88 per share, Fiverr trades at 1.4x forward EV/EBITDA. Read our free research report to see why you should think twice about including FVRR in your portfolio.
Matrix Service (MTRX)
Trailing 12-Month GAAP Operating Margin: -2.8%
Founded in Oklahoma, Matrix Service (NASDAQ:MTRX) provides engineering, fabrication, construction, and maintenance services primarily to the energy and industrial markets.
Why Does MTRX Give Us Pause?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 2.9% annually over the last five years
- Gross margin of 3.8% reflects its high production costs
- Issuance of new shares over the last five years caused its earnings per share to fall by 66.3% annually, even worse than its revenue declines
Matrix Service’s stock price of $14.17 implies a valuation ratio of 25.6x forward P/E. Dive into our free research report to see why there are better opportunities than MTRX.
One Stock to Watch:
SmartRent (SMRT)
Trailing 12-Month GAAP Operating Margin: -48.2%
Founded by an employee at a real estate rental company, SmartRent (NYSE:SMRT) provides smart home devices and software for multifamily residential properties, single-family rental homes, and student housing communities.
Why Does SMRT Catch Our Eye?
- Offerings are pivotal for their customers' operations as its ARR has averaged 22.9% growth over the past two years
- Earnings growth has trumped its peers over the last three years as its EPS has compounded at 24.1% annually
- Historical investments are beginning to pay off as its returns on capital are growing
SmartRent is trading at $1.72 per share, or 78.1x forward EV-to-EBITDA. Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.