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. That said, here is one unprofitable company investing heavily to secure market share and two that could struggle to survive.
Two Stocks to Sell:
Sunrun (RUN)
Trailing 12-Month GAAP Operating Margin: -1.7%
Helping homeowners use solar energy to power their homes, Sunrun (NASDAQ: RUN) provides residential solar electricity, specializing in panel installation and leasing services.
Why Does RUN Fall Short?
- Persistent operating margin losses suggest the business manages its expenses poorly
- Cash burn makes us question whether it can achieve sustainable long-term growth
- 20× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Sunrun’s stock price of $12.42 implies a valuation ratio of 20.4x forward P/E. To fully understand why you should be careful with RUN, check out our full research report (it’s free).
Rivian (RIVN)
Trailing 12-Month GAAP Operating Margin: -68.9%
The manufacturer of Amazon’s delivery trucks, Rivian (NASDAQ: RIVN) designs, manufactures, and sells electric vehicles and commercial delivery vans.
Why Do We Think Twice About RIVN?
- Flat vehicles delivered suggest it might need to invest in product improvements to get back on track
- Negative free cash flow raises questions about the return timeline for its investments
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Rivian is trading at $17.49 per share, or 2.7x forward price-to-sales. Read our free research report to see why you should think twice about including RIVN in your portfolio.
One Stock to Watch:
StepStone Group (STEP)
Trailing 12-Month GAAP Operating Margin: -77.5%
Operating as both an advisor and asset manager with over $100 billion in assets under management, StepStone Group (NASDAQ: STEP) is an investment firm that provides clients with access to private market investments across private equity, real estate, private debt, and infrastructure.
Why Is STEP on Our Radar?
- Annual revenue growth of 40.9% over the last two years was superb and indicates its market share increased during this cycle
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 33.1% annually
At $43.01 per share, StepStone Group trades at 18x forward P/E. Is now the time to initiate a position? 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.
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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.
