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. That said, here are three unprofitable companies that don’t make the cut and some better opportunities instead.

Target Hospitality (TH)

Trailing 12-Month GAAP Operating Margin: -11.1%

Building mini-communities at places such as oil drilling sites, Target Hospitality (NASDAQ:TH) is a provider of specialty workforce lodging accommodations and services.

Why Do We Avoid TH?

1. Number of utilized beds has disappointed over the past two years, indicating weak demand for its offerings
2. Low free cash flow margin of 7.9% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

At $19.35 per share, Target Hospitality trades at 36.8x forward P/E. Read our free research report to see why you should think twice about including TH in your portfolio.

Sphere Entertainment (SPHR)

Trailing 12-Month GAAP Operating Margin: -6.1%

Famous for its viral Las Vegas Sphere venue, Sphere Entertainment (NYSE:SPHR) hosts live entertainment events and distributes content across various media platforms.

Why Are We Bearish on SPHR?

1. Lackluster 10.8% annual revenue growth over the last five years indicates the company is losing ground to competitors
2. Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 2.7 percentage points
3. Unprofitable operations could lead to additional rounds of dilutive equity financing if the credit window closes

Sphere Entertainment’s stock price of $149.24 implies a valuation ratio of 17.4x forward EV-to-EBITDA. To fully understand why you should be careful with SPHR, check out our full research report (it’s free).

Fastly (FSLY)

Trailing 12-Month GAAP Operating Margin: -12%

Taking its name from the core advantage it delivers to customers, Fastly (NASDAQ: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 Does FSLY Fall Short?

1. 13.7% annual revenue growth over the last two years was slower than its software peers
2. Steep infrastructure costs and weaker unit economics for a software company are reflected in its low gross margin of 61.5%
3. Suboptimal cost structure is highlighted by its history of operating margin losses

Fastly is trading at $23.67 per share, or 4.9x forward price-to-sales. If you’re considering FSLY for your portfolio, see our FREE research report to learn more.

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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-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.