Investing in unprofitable stocks can be a risky proposition. Of course, all public companies aim to earn profits eventually. However, not all of them will achieve that goal. That being said, investors can choose to avoid companies that generate losses on the bottom line, but that would deprive them of the potential to earn significant gains from these stocks as they progress through their life cycle.
Typically, stock markets reward investors commensurate with the risk they take. Therefore, investing in unprofitable companies can sometimes come with high risks and the potential for high returns. If you are a long-term investor with high-risk tolerance, Roblox (RBLX 0.97%), Skillz (SKLZ -2.51%), and fuboTV (FUBO -2.17%) are three stocks you can buy right now.
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Roblox
Roblox is a pioneer of the metaverse, where individuals interact with the environment and each other virtually. Roblox was already growing, but the onset of the coronavirus pandemic caused a surge in engagement.
As of Sept. 30, the company boasted 47.3 million daily active users. That's up from 36.2 million at the same time last year, and 18.4 million from two years ago. To say Roblox is growing would be an understatement. Spending on the platform is also increasing. Revenue increased by 102% from last year to reach $509 million in the third quarter.
Still, Roblox has not reached a scale sufficient to generate profits on the bottom line. It generated a net loss of $74 million in Q3, up from a loss of $48 million last year at the same time.
Skillz
Skillz operates a mobile gaming platform. Players can sign up for Skillz and play games on computers, smartphones, and tablets. The exciting part about Skillz is that players can wager on their games and win cash prizes. Equally interesting is that Skillz is not considered a gambling company, an important distinction because the outcome of the games it offers depends mainly on skill and not chance.
The company is gaining traction with gamers, and its revenue in fiscal Q3 was up 70% from the same time last year. Moreover, revenue has more than tripled from the third quarter in 2019, growing from $31 million to $102 million.
Like Roblox, Skillz generates losses on the bottom line as management is spending aggressively to acquire and retain customers. Skillz's net loss in the nine months ended Sept. 30 reached $82.4 million, up from $78 million during the same time last year.
fuboTV
fuboTV is a streaming substitute to cable TV. Since it offers similar services to cable TV, it is gaining subscribers rapidly with a lot more convenience. fuboTV reported adding 262,884 new subscribers in the third quarter. That was 108% higher than the same quarter last year. Of course, with a growing customer base, revenue is increasing. Indeed, fuboTV's sales increased by 156% in Q3 to reach $156.7 million.
fuboTV is no different than the two companies mentioned earlier regarding profits. The company lost $105.9 million on the bottom line in Q3, down from $274 million at the same time last year.
Each company is generating losses on the bottom line but is making plenty of headway building out its business, growing customers, and revenue. If their pace of growth continues, it may only be a matter of time until profitability is achieved. Roblox, Skillz, and fuboTV all come with the risk they may never achieve profitability, but their pace of growth suggests ample rewards for the risk-seeking investor.
