Companies that burn cash at a rapid pace can run into serious trouble if they fail to secure funding. Without a clear path to profitability, these businesses risk dilution, mounting debt, or even bankruptcy.

Not all companies are worth the risk, and that’s why we built StockStory - to help you spot the red flags. That said, here are three cash-burning companies that don’t make the cut and some better opportunities instead.

Newmark (NMRK)

Trailing 12-Month Free Cash Flow Margin: -2.2%

Founded in 1929, Newmark (NASDAQ: NMRK) provides commercial real estate services, including leasing advisory, global corporate services, investment sales and capital markets, property and facilities management, valuation and advisory, and consulting.

Why Do We Steer Clear of NMRK?

1. 10.3% annual revenue growth over the last five years was slower than its consumer discretionary peers
2. Cash burn makes us question whether it can achieve sustainable long-term growth
3. Returns on capital haven’t budged, indicating management couldn’t drive additional value creation

At $17.44 per share, Newmark trades at 9.9x forward P/E. To fully understand why you should be careful with NMRK, check out our full research report (it’s free).

Rocket Lab (RKLB)

Trailing 12-Month Free Cash Flow Margin: -41.8%

Becoming the first private company in the Southern Hemisphere to reach space, Rocket Lab (NASDAQ: RKLB) offers rockets designed for launching small satellites.

Why Are We Cautious About RKLB?

1. Poor expense management has led to operating margin losses
2. Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term
3. Cash-burning tendencies make us wonder if it can sustainably generate shareholder value

Rocket Lab’s stock price of $96.30 implies a valuation ratio of 63.2x forward price-to-sales. Dive into our free research report to see why there are better opportunities than RKLB.

Ocular Therapeutix (OCUL)

Trailing 12-Month Free Cash Flow Margin: -358%

Pioneering a drug delivery platform that can eliminate the need for monthly eye injections, Ocular Therapeutix (NASDAQ: OCUL) develops sustained-release treatments for eye diseases using its proprietary ELUTYX bioresorbable hydrogel technology that gradually releases medication.

Why Do We Avoid OCUL?

1. Sales tumbled by 1.7% annually over the last two years, showing market trends are working against its favor during this cycle
2. 206.8 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

Ocular Therapeutix is trading at $11.35 per share, or 35x forward price-to-sales. If you’re considering OCUL for your portfolio, see our FREE research report to learn more.

Stocks We Like More

Check out the high-quality names we’ve flagged in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.