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. 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:
Sunrun (RUN)
Trailing 12-Month GAAP Operating Margin: -4.3%
Helping homeowners use solar energy to power their homes, Sunrun (NASDAQ: RUN) provides residential solar electricity, specializing in panel installation and leasing services.
Why Are We Wary of RUN?
- Historical operating margin losses point to an inefficient cost structure
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- High net-debt-to-EBITDA ratio of 23× increases the risk of forced asset sales or dilutive financing if operational performance weakens
At $11.92 per share, Sunrun trades at 43.7x forward P/E. Read our free research report to see why you should think twice about including RUN in your portfolio.
Clover Health (CLOV)
Trailing 12-Month GAAP Operating Margin: -4.4%
Founded in 2014 to improve healthcare for America's seniors through technology, Clover Health (NASDAQ: CLOV) provides Medicare Advantage plans for seniors with a focus on affordable care and uses its proprietary Clover Assistant software to help physicians manage patient care.
Why Does CLOV Fall Short?
- Subscale operations are evident in its revenue base of $1.92 billion, meaning it has fewer distribution channels than its larger rivals (but more room for growth)
- Negative free cash flow raises questions about the return timeline for its investments
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Clover Health is trading at $1.98 per share, or 25.2x forward P/E. If you’re considering CLOV for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
WEBTOON (WBTN)
Trailing 12-Month GAAP Operating Margin: -4.6%
Pioneering a vertical-scrolling format optimized for mobile devices, WEBTOON Entertainment (NASDAQ: WBTN) operates a global platform where creators publish serialized web-comics and web-novels that users can read in bite-sized episodes.
Why Do We Watch WBTN?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 8.9% annual sales growth over the last three years
- Adjusted operating margin expanded by 8.7 percentage points over the last four years as it scaled and became more efficient
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 31.9% over the last two years outstripped its revenue performance
WEBTOON’s stock price of $9.02 implies a valuation ratio of 58.7x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.
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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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
