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.
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 companiesto avoid and some better opportunities instead.
Commerce (CMRC)
Trailing 12-Month GAAP Operating Margin: -2.3%
As a founding member of the MACH Alliance advocating for modern tech standards, Commerce (NASDAQ: CMRC) provides a SaaS platform that enables businesses to build and manage online stores, connect with marketplaces, and integrate with point-of-sale systems.
Why Do We Think CMRC Will Underperform?
- Underwhelming ARR growth of 2.5% over the last year suggests the company faced challenges in acquiring and retaining long-term customers
- Estimated sales growth of 3.3% for the next 12 months is soft and implies weaker demand
- Projected 3.2 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
Commerce’s stock price of $3.14 implies a valuation ratio of 0.7x forward price-to-sales. Read our free research report to see why you should think twice about including CMRC in your portfolio.
Domo (DOMO)
Trailing 12-Month GAAP Operating Margin: -11.2%
Named for the Japanese word meaning "thank you very much," Domo (NASDAQ: DOMO) provides a cloud-based business intelligence platform that connects people with real-time data and insights across organizations.
Why Should You Dump DOMO?
- Products, pricing, or go-to-market strategy may need some adjustments as its 1.3% average billings growth over the last year was weak
- Forecasted revenue decline of 1.7% for the upcoming 12 months implies demand will fall off a cliff
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
Domo is trading at $3.50 per share, or 0.5x forward price-to-sales. If you’re considering DOMO for your portfolio, see our FREE research report to learn more.
fuboTV (FUBO)
Trailing 12-Month GAAP Operating Margin: -2%
Originally launched as a soccer streaming platform, fuboTV (NYSE: FUBO) is a video streaming service specializing in live sports, news, and entertainment content.
Why Are We Wary of FUBO?
- Uptick in domestic subscribers indicates the company’s underlying demand is healthy
- Poor expense management has led to operating margin losses
- Cash burn makes us question whether it can achieve sustainable long-term growth
At $10.21 per share, fuboTV trades at 2,158.5x forward P/E. Check out our free in-depth research report to learn more about why FUBO doesn’t pass our bar.
Stocks We Like More
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