Running at a loss can be a red flag. Many of these businesses face mounting challenges as competition increases and funding becomes harder to secure.
Finding the right unprofitable companies is difficult, which is why we started StockStory — to help you navigate the market. That said, here are three unprofitable companiesto avoid and some better opportunities instead.
Bandwidth (BAND)
Trailing 12-Month GAAP Operating Margin: -1.8%
Powering communications for tech giants like Microsoft, Google, and Zoom, Bandwidth (NASDAQ:BAND) provides cloud-based communications software and APIs that enable businesses to embed voice, messaging, and emergency services into their applications and platforms.
Why Do We Think BAND Will Underperform?
- Sales trends were unexciting over the last two years as its 11.9% annual growth was below the typical software company
- Bad unit economics and steep infrastructure costs are reflected in its gross margin of 37.2%, one of the worst among software companies
- Operating margin didn’t move over the last year, showing it couldn’t increase its efficiency
At $57.37 per share, Bandwidth trades at 2.2x forward price-to-sales. Dive into our free research report to see why there are better opportunities than BAND.
Offerpad (OPAD)
Trailing 12-Month GAAP Operating Margin: -7.7%
Known for giving homeowners cash offers within 24 hours, Offerpad (NYSE:OPAD) operates a tech-enabled platform specializing in direct home buying and selling solutions.
Why Are We Bearish on OPAD?
- Performance surrounding its homes sold has lagged its peers
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
- EBITDA losses may force it to accept punitive lending terms or high-cost debt
Offerpad’s stock price of $2.99 implies a valuation ratio of 0x forward price-to-sales. Read our free research report to see why you should think twice about including OPAD in your portfolio.
Hyster-Yale Materials Handling (HY)
Trailing 12-Month GAAP Operating Margin: -2.7%
Playing a significant role in the development of the hydraulic lift truck, Hyster-Yale (NYSE:HY) designs, manufactures, and sells materials handling equipment to various sectors.
Why Are We Out on HY?
- Annual sales declines of 9.1% for the past two years show its products and services struggled to connect with the market during this cycle
- Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 41.4% annually
- Unprofitable operations could lead to additional rounds of dilutive equity financing if the credit window closes
Hyster-Yale Materials Handling is trading at $32.98 per share, or 119x forward P/E. If you’re considering HY for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. 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 (+1,460% 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.