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.
Finding the right unprofitable companies is difficult, which is why we started StockStory — to help you navigate the market. Keeping that in mind, here is one unprofitable company investing heavily to secure market share and two that could struggle to survive.
Two Stocks to Sell:
Molson Coors (TAP)
Trailing 12-Month GAAP Operating Margin: -22.7%
Sporting an impressive roster of iconic beer brands, Molson Coors (NYSE:TAP) is a global brewing giant with a rich history dating back more than two centuries.
Why Do We Pass on TAP?
- Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 37 percentage points
- ROIC of -0.2% reflects management’s challenges in identifying attractive investment opportunities, and its shrinking returns suggest its past profit sources are losing steam
Molson Coors is trading at $37.89 per share, or 7.9x forward P/E. Check out our free in-depth research report to learn more about why TAP doesn’t pass our bar.
WEBTOON (WBTN)
Trailing 12-Month GAAP Operating Margin: -3.8%
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 Does WBTN Worry Us?
- Annual revenue growth of 2.6% over the last two years was below our standards for the business services sector
- Earnings per share have dipped by 78.9% annually over the past one years, which is concerning because stock prices follow EPS over the long term
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of -0.8% for the last four years
At $9.91 per share, WEBTOON trades at 103.2x forward P/E. Dive into our free research report to see why there are better opportunities than WBTN.
One Stock to Buy:
StepStone Group (STEP)
Trailing 12-Month GAAP Operating Margin: -84.5%
Operating as both an advisor and asset manager with over $100 billion in assets under management, StepStone Group (NASDAQ:STEP) is an investment firm that provides clients with access to private market investments across private equity, real estate, private debt, and infrastructure.
Why Will STEP Beat the Market?
- Annual revenue growth of 37.3% over the past two years was outstanding, reflecting market share gains this cycle
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 24.7% annually
StepStone Group’s stock price of $43.91 implies a valuation ratio of 16.9x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth 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 Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.