Unprofitable companies face headwinds as they struggle to keep operating expenses under control. Some may be investing heavily, but the majority fail to convert spending into sustainable growth.
A lack of profits can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. That said, here is one unprofitable company with the potential to become an industry leader and two that could struggle to survive.
Two Stocks to Sell:
Udemy (UDMY)
Trailing 12-Month GAAP Operating Margin: -5.2%
With courses ranging from investing to cooking to computer programming, Udemy (NASDAQ:UDMY) is an online learning platform that connects learners with expert instructors who specialize in a wide range of topics.
Why Are We Cautious About UDMY?
- Focus on expanding its platform came at the expense of monetization as its average revenue per buyer fell by 1.3% annually
- Sales are projected to remain flat over the next 12 months as demand decelerates from its three-year trend
- Excessive marketing spend signals little organic demand and traction for its platform
Udemy’s stock price of $6.70 implies a valuation ratio of 11.3x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than UDMY.
Rivian (RIVN)
Trailing 12-Month GAAP Operating Margin: -69.9%
The manufacturer of Amazon’s delivery trucks, Rivian (NASDAQ:RIVN) designs, manufactures, and sells electric vehicles and commercial delivery vans.
Why Does RIVN Give Us Pause?
- Negative 49.3% gross margin means it loses money on every sale and must pivot or scale quickly to survive
- Cash-burning history makes us doubt the long-term viability of its business model
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Rivian is trading at $13.10 per share, or 2.6x forward price-to-sales. If you’re considering RIVN for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Zeta Global (ZETA)
Trailing 12-Month GAAP Operating Margin: -2.3%
Powered by an AI engine that processes over one trillion consumer signals monthly, Zeta Global (NYSE:ZETA) operates a data-driven cloud platform that helps companies target, connect, and engage with consumers through personalized marketing across channels like email, social media, and video.
Why Will ZETA Beat the Market?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 40.6% over the last year
- Projected revenue growth of 17.9% for the next 12 months suggests its momentum from the last two years will persist
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
At $20.50 per share, Zeta Global trades at 3.2x forward price-to-sales. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
Stocks We Like Even More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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