3 Money-Losing Stocks Facing Unresolved Issues

Understanding the Risks of High Cash Burn Companies

Some businesses rapidly spend cash in hopes of scaling up, but not all are able to convert that outflow into lasting growth. When a company’s cash reserves dwindle and its financial foundation is weak, investors could face substantial losses.

Consistently negative cash flow is a warning sign, yet StockStory can help pinpoint which firms are more likely to weather financial storms. Below, we highlight three companies with high cash burn that may not be the best picks, along with some alternatives worth considering.

fuboTV (FUBO)

12-Month Free Cash Flow Margin: -3.2%

fuboTV (NYSE:FUBO) began as a soccer-focused streaming service and has since evolved into a platform offering live sports, news, and entertainment content.

Reasons to Be Cautious About FUBO:

• Growth in U.S. subscribers has been slower than anticipated, indicating weaker demand for its offerings.
• The company has a track record of operating at a loss, suggesting its cost structure is inefficient.
• Ongoing negative free cash flow casts doubt on when, or if, its investments will pay off.

With shares trading at $1.19 and a forward EV-to-EBITDA ratio of 1.4x, investors should carefully evaluate FUBO.

Bally's (BALY)

12-Month Free Cash Flow Margin: -10.7%

Bally's Corporation (NYSE:BALY), based in Providence, Rhode Island, operates a diverse portfolio of casinos, resorts, and online gaming platforms worldwide.

Why We’re Steering Clear of BALY:

• Annual revenue growth of just 2% over the past two years lags behind other consumer discretionary companies.
• Returns on capital have declined from already low levels, suggesting recent investments may be eroding value.
• Weak liquidity could force the company to raise additional capital, potentially diluting existing shareholders.

Bally's is currently priced at $13.41 per share, with a forward EV-to-EBITDA multiple of 10.9x.

EVgo (EVGO)

12-Month Free Cash Flow Margin: -32.4%

EVgo (NASDAQ:EVGO) was established as part of a settlement between NRG Energy and the California Public Utilities Commission, and now operates a network of fast-charging stations for electric vehicles across the U.S.

Concerns About EVGO:

• Persistent operating losses highlight ongoing inefficiencies in managing costs.
• The company’s pattern of burning through cash raises doubts about its ability to deliver long-term value to shareholders.
• Declining cash reserves could necessitate new fundraising, which may dilute current investors’ stakes.

EVgo trades at $2.22 per share, equating to a forward EV-to-EBITDA ratio of 55.1x.

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