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.
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 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:
Amplitude (AMPL)
Trailing 12-Month GAAP Operating Margin: -28%
Born from the realization that companies were flying blind when it came to understanding user behavior in their digital products, Amplitude (NASDAQ: AMPL) provides a digital analytics platform that helps businesses understand how people use their digital products to improve user experiences and drive revenue growth.
Why Does AMPL Give Us Pause?
- Struggled to drive increased usage of its software, demonstrated by its subpar 102% net revenue retention rate
- Persistent operating margin losses suggest the business manages its expenses poorly
- Poor free cash flow margin of 6.8% for the last year limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
Amplitude’s stock price of $6.39 implies a valuation ratio of 2.3x forward price-to-sales. Read our free research report to see why you should think twice about including AMPL in your portfolio.
Offerpad (OPAD)
Trailing 12-Month GAAP Operating Margin: -5.9%
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 Should You Dump OPAD?
- Demand for its offerings was relatively low as its number of homes sold has underwhelmed
- Free cash flow margin is forecasted to shrink by 16.2 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
- Negative EBITDA restricts its access to capital and increases the probability of shareholder dilution if things turn unexpectedly
Offerpad is trading at $0.63 per share, or 0x forward price-to-sales. Check out our free in-depth research report to learn more about why OPAD doesn’t pass our bar.
One Stock to Buy:
GitLab (GTLB)
Trailing 12-Month GAAP Operating Margin: -7.4%
With its all-remote workforce pioneering a new approach to software development, GitLab (NASDAQ: GTLB) provides a single-application DevSecOps platform that helps development, operations, and security teams collaborate to build, secure, and deploy software faster.
Why Is GTLB a Good Business?
- Ability to secure long-term commitments with customers is evident in its 26.4% ARR growth over the last year
- Customers tend to stick around and use its software more over time as its net revenue retention rate clocks in at 120%
- Software is difficult to replicate at scale and leads to a best-in-class gross margin of 87.4%
At $20.23 per share, GitLab trades at 3.2x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
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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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
