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 companiesto steer clear of and a few better alternatives.
Bumble (BMBL)
Trailing 12-Month GAAP Operating Margin: -62.6%
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 Are We Cautious About BMBL?
- Struggled with new customer acquisition as its paying users averaged 6.5% declines
- Concerning trends in both user engagement and monetization suggest its platform’s efficacy is declining as its average revenue per buyer fell by 9.8% annually
- Sales are projected to tank by 9.2% over the next 12 months as its demand continues evaporating
Bumble is trading at $2.88 per share, or 2.9x forward EV/EBITDA. If you’re considering BMBL for your portfolio, see our FREE research report to learn more.
DraftKings (DKNG)
Trailing 12-Month GAAP Operating Margin: -2.9%
Getting its start in daily fantasy sports, DraftKings (NASDAQ:DKNG) is a digital sports entertainment and gaming company.
Why Do We Think DKNG Will Underperform?
- Muted 20.3% annual revenue growth over the last two years shows its demand lagged behind its consumer discretionary peers
- Suboptimal cost structure is highlighted by its history of operating margin losses
- Poor free cash flow margin of 9.9% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
At $24.22 per share, DraftKings trades at 19.8x forward P/E. Dive into our free research report to see why there are better opportunities than DKNG.
Kemper (KMPR)
Trailing 12-Month GAAP Operating Margin: -11.3%
Originally known as Unitrin until rebranding in 2011, Kemper (NYSE:KMPR) is an insurance holding company that provides automobile, homeowners, life, and other insurance products to individuals and businesses across the United States.
Why Should You Sell KMPR?
- Net premiums earned contracted by 3.3% annually over the last five years, showing unfavorable market dynamics this cycle
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
- Products and services are facing significant credit quality challenges during this cycle as book value per share has declined by 11.3% annually over the last five years
Kemper’s stock price of $28.70 implies a valuation ratio of 0.7x forward P/B. Check out our free in-depth research report to learn more about why KMPR doesn’t pass our bar.
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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.