3 Money-Losing Stocks Facing Unresolved Issues

Understanding the Risks of High Cash Burn Companies

Some businesses aggressively spend in hopes of rapid expansion, but not all are able to translate that spending into lasting growth. When a company depletes cash quickly without a solid financial foundation, investors may face considerable losses.

Consistently negative cash flow can spell trouble. StockStory helps you spot which companies are more likely to survive these challenges. Below, we highlight three firms with high cash burn that we believe are best avoided, along with some more promising alternatives.

fuboTV (FUBO)

Trailing 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:

• Domestic subscriber growth has been sluggish, indicating that customer adoption is lagging behind company expectations.
• The company’s ongoing operating margin losses point to an inefficient cost structure.
• Persistent negative free cash flow raises concerns about when, or if, investments will yield returns.

With shares trading at $1.19, fuboTV’s forward EV-to-EBITDA ratio stands at 1.4x. Read our complimentary research report to learn more about FUBO.

Bally's (BALY)

Trailing 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:

• Revenue has grown just 2% annually over the past two years, lagging behind other consumer discretionary companies.
• Returns on capital are declining from an already low base, suggesting recent investments may be eroding value.
• Weak liquidity could force the company to raise additional equity, potentially diluting existing shareholders.

At $13.41 per share, Bally's is valued at 10.9x forward EV-to-EBITDA. See our free research report to find out why BALY may not be the best addition to your portfolio.

EVgo (EVGO)

Trailing 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. The company operates a network of fast-charging stations for electric vehicles across the United States.

Why EVGO Misses the Mark:

• Ongoing operating margin losses highlight inefficiencies in the company’s cost structure.
• Its pattern of burning through cash raises doubts about its ability to deliver lasting value to shareholders.
• With dwindling cash reserves, the company may need to raise more capital, which could dilute current investors.

EVgo’s shares are priced at $2.22, equating to a forward EV-to-EBITDA multiple of 55.1x. Explore our full research report to understand the risks of investing in EVGO.

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