Guess how many companies in the ASX 300 actually make no money

Can these companies evolve from loss-making to market champions?

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Key points

  • Research has reportedly found nearly a sixth of ASX 300 shares are unprofitable
  • Some loss-making stocks may well hold a place in many investors' portfolios
  • Market watchers might be surprised by which tech and lithium favourites are yet to turn a penny

The S&P/ASX 300 Index (ASX: XKO) is built from shares in most of the market's biggest names. But, in an interesting turn of events, a fair chunk of them are currently unprofitable.

Indeed, nearly a sixth of the entire index is said to be trading on red balance sheets.

So, which of the market's favourites are operating at a loss? Let's take a look.

Do you own unprofitable ASX 300 shares?

The ASX 300 is reportedly housing a higher-than-normal number of unprofitable companies right now.

Research by MST Marquee, cited by the Australian Financial Review, found 50 of the 300 shares making up the index are currently operating at a loss.

That's said to be 30% more unprofitable companies than is historically housed by the index.

And some may well be filling a spot in many investors' portfolios.

Of course, market watchers are probably aware that the likes of Zip Co Ltd (ASX: ZIP) is yet to post a profit.

The buy now, pay later (BNPL) favourite posted a $1.1 billion loss for financial year 2022. As my Fool colleague Tony pointed out, that figure is greater than the company's market capitalisation.

Looking to Zip's tech peers, ASX 300 icon Novonix Ltd (ASX: NVX) is also unprofitable. As is Life360 Inc (ASX: 360).

Other non-profitable stocks that garner plenty of attention from investors are those operating in the lithium space.

Core Lithium Ltd (ASX: CXO), for instance, isn't yet producing. Thus, it has nothing to profit from. It's a similar story for Core Lithium's peer, Lake Resources NL (ASX: LKE).

Prior to the index's rebalance this week, which saw the inclusion of another two unprofitable stocks, 48 ASX 300 shares – valued at a combined $60 billion – were yet to turn a penny, the AFR reports.

Is there hope for unprofitable ASX favourites?

MST Marquee senior research analyst Hasan Tevfik dubbed unprofitable companies "birds without wings", courtesy of the publication.

He reportedly said for every stock that evolves from a loss-maker to a market champion, there are likely to be several that miss out on such happy endings.

However, as Tevfik reportedly noted, Amazon.com Inc (NASDAQ: AMZN) was, for the years leading up to the early 2000s, an unprofitable tech stock.

And ASX 300 lithium share Pilbara Minerals Ltd (ASX: PLS) announced its maiden profit just last month, perhaps proving the journey can sometimes be worth it.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon and ZIPCOLTD FPO. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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