While some companies burn cash to fuel expansion, others struggle to turn spending into sustainable growth. A high cash burn rate without a strong balance sheet can leave investors exposed to significant downside.
Negative cash flow can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. Keeping that in mind, here are three cash-burning companies to steer clear of and a few better alternatives.
iHeartMedia (IHRT)
Trailing 12-Month Free Cash Flow Margin: -334%
Occasionally featuring celebrity hosts like Ryan Seacrest on its shows, iHeartMedia (NASDAQ: IHRT) is a leading multimedia company renowned for its extensive network of radio stations, digital platforms, and live events across the globe.
Why Is IHRT Risky?
- Muted 6.5% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
iHeartMedia’s stock price of $3.97 implies a valuation ratio of 0.2x forward price-to-sales. Read our free research report to see why you should think twice about including IHRT in your portfolio.
Fluence Energy (FLNC)
Trailing 12-Month Free Cash Flow Margin: -10.4%
Pioneering the use of lithium-ion batteries for grid storage, Fluence (NASDAQ: FLNC) helps store renewable energy sources with battery systems.
Why Do We Think Twice About FLNC?
- Earnings per share fell by 3.6% annually over the last two years while its revenue grew, partly because it diluted shareholders
- Negative free cash flow raises questions about the return timeline for its investments
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
At $23.68 per share, Fluence Energy trades at 45.4x forward EV-to-EBITDA. To fully understand why you should be careful with FLNC, check out our full research report (it’s free).
Novavax (NVAX)
Trailing 12-Month Free Cash Flow Margin: -16.4%
Pioneering a nanoparticle technology that mimics the molecular structure of disease pathogens, Novavax (NASDAQ: NVAX) develops and commercializes protein-based vaccines for infectious diseases, with a primary focus on its COVID-19 vaccine and combination respiratory vaccine candidates.
Why Do We Think NVAX Will Underperform?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 22.6% annually over the last two years
- Projected sales decline of 50.7% over the next 12 months indicates demand will continue deteriorating
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
Novavax is trading at $10.18 per share, or 5.7x forward price-to-sales. If you’re considering NVAX for your portfolio, see our FREE research report to learn more.
Stocks We Like More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
