Unprofitable companies face headwinds as they struggle to keep operating expenses under control. Some may be investing heavily, but the majority fail to convert spending into sustainable growth.
A lack of profits can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. Keeping that in mind, here are three unprofitable companiesthat don’t make the cut and some better opportunities instead.
ON24 (ONTF)
Trailing 12-Month GAAP Operating Margin: -33.5%
Started in 1998 as a platform to broadcast press conferences, ON24’s (NYSE:ONTF) software helps organizations organize online webinars and other virtual events and convert prospects into customers.
Why Should You Dump ONTF?
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Customers had second thoughts about committing to its platform over the last year as its billings averaged 3.3% declines
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Forecasted revenue decline of 6% for the upcoming 12 months implies demand will fall even further
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Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
ON24 is trading at $5.45 per share, or 1.7x forward price-to-sales. If you’re considering ONTF for your portfolio, see our FREE research report to learn more.
Opendoor (OPEN)
Trailing 12-Month GAAP Operating Margin: -5.6%
Founded by real estate guru Eric Wu, Opendoor (NASDAQ:OPEN) offers a technology-driven, convenient, and streamlined process to buy and sell homes.
Why Is OPEN Risky?
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Number of homes purchased has disappointed over the past two years, indicating weak demand for its offerings
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Cash-burning history makes us doubt the long-term viability of its business model
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Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $0.54 per share, Opendoor trades at 0.1x forward price-to-sales. Read our free research report to see why you should think twice about including OPEN in your portfolio, it’s free.
J. M. Smucker (SJM)
Trailing 12-Month GAAP Operating Margin: -7.7%
Best known for its fruit jams and spreads, J.M Smucker (NYSE:SJM) is a packaged foods company whose products span from peanut butter and coffee to pet food.
Why Do We Avoid SJM?
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Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
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Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 23.7 percentage points
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Underwhelming 2.8% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam
J. M. Smucker’s stock price of $96.10 implies a valuation ratio of 9.4x forward P/E. Check out our free in-depth research report to learn more about why SJM doesn’t pass our bar.
Stocks We Like More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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