3 Unprofitable Stocks Walking a Fine Line

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.

Finding the right unprofitable companies is difficult, which is why we started StockStory — to help you navigate the market. That said, here are three unprofitable companiesto steer clear of and a few better alternatives.

Fluence Energy (FLNC)

Trailing 12-Month GAAP Operating Margin: -1.9%

Pioneering the use of lithium-ion batteries for grid storage, Fluence (NASDAQ:FLNC) helps store renewable energy sources with battery systems.

Why Are We Cautious About FLNC?

1. Earnings per share fell by 3.6% annually over the last two years while its revenue grew, partly because it diluted shareholders
2. Cash-burning history makes us doubt the long-term viability of its business model
3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

At $18.94 per share, Fluence Energy trades at 34.7x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why FLNC doesn’t pass our bar.

Blink Charging (BLNK)

Trailing 12-Month GAAP Operating Margin: -74.3%

One of the first EV charging companies to go public, Blink Charging (NASDAQ:BLNK) is a manufacturer, owner, operator, and provider of electric vehicle charging equipment and networked EV charging services.

Why Is BLNK Not Exciting?

1. Sales tumbled by 18.7% annually over the last two years, showing market trends are working against it during this cycle
2. Cash burn makes us question whether it can achieve sustainable long-term growth
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

Blink Charging is trading at $0.84 per share, or 0.9x forward price-to-sales. If you’re considering BLNK for your portfolio, see our FREE research report to learn more.

Guardant Health (GH)

Trailing 12-Month GAAP Operating Margin: -41.4%

Pioneering the field of "liquid biopsy" with technology that can identify cancer-specific genetic mutations from a simple blood draw, Guardant Health (NASDAQ:GH) develops blood tests that detect and monitor cancer by analyzing tumor DNA in the bloodstream, helping doctors make treatment decisions without invasive biopsies.

Why Does GH Fall Short?

1. Smaller revenue base of $1.08 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy (but also enables it to grow faster if it executes properly)
2. Cash-burning history makes us doubt the long-term viability of its business model
3. Unprofitable operations could lead to additional rounds of dilutive equity financing if the credit window closes

Guardant Health’s stock price of $129.08 implies a valuation ratio of 12.6x forward price-to-sales. Check out our free in-depth research report to learn more about why GH doesn’t pass our bar.

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