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.

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 are three unprofitable companiesthat don’t make the cut and some better opportunities instead.

Bumble (BMBL)

Trailing 12-Month GAAP Operating Margin: -106%

Started by the co-founder of Tinder, Whitney Wolfe Herd, Bumble (NASDAQ: BMBL) is a leading dating app built with women at the center.

Why Does BMBL Fall Short?

1. Muted 7.2% annual revenue growth over the last three years shows its demand lagged behind its consumer internet peers
2. Focus on expanding its platform came at the expense of monetization as its average revenue per buyer fell by 4.6% annually
3. Estimated sales decline of 9.7% for the next 12 months implies a challenging demand environment

At $5.60 per share, Bumble trades at 2x forward EV/EBITDA. Check out our free in-depth research report to learn more about why BMBL doesn’t pass our bar.

agilon health (AGL)

Trailing 12-Month GAAP Operating Margin: -6.4%

Transforming how doctors care for seniors by shifting financial incentives from volume to outcomes, agilon health (NYSE: AGL) provides a platform that helps primary care physicians transition to value-based care models for Medicare patients through long-term partnerships and global capitation arrangements.

Why Do We Think Twice About AGL?

1. Costs have risen faster than its revenue over the last two years, causing its adjusted operating margin to decline by 4.1 percentage points
2. Negative free cash flow raises questions about the return timeline for its investments
3. Negative returns on capital show management lost money while trying to expand the business

agilon health is trading at $1.02 per share, or 0.1x forward price-to-sales. To fully understand why you should be careful with AGL, check out our full research report (it’s free for active Edge members).

Fastly (FSLY)

Trailing 12-Month GAAP Operating Margin: -26.3%

Taking its name from the core advantage it delivers to customers, Fastly (NYSE: FSLY) operates an edge cloud platform that processes, secures, and delivers web content as close to end users as possible, enabling faster digital experiences.

Why Should You Sell FSLY?

1. Net revenue retention rate of 103% trails the industry benchmark of 110%+ and shows it has a tough time increasing customer spending
2. Bad unit economics and steep infrastructure costs are reflected in its gross margin of 53.9%, one of the worst among software companies
3. Suboptimal cost structure is highlighted by its history of operating margin losses

Fastly’s stock price of $8.55 implies a valuation ratio of 2x forward price-to-sales. If you’re considering FSLY for your portfolio, see our FREE research report to learn more.

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