Low Gross MarginA structurally low gross margin limits the scale of operating profits and makes the company highly sensitive to input-cost increases or pricing pressure. Without material product mix shifts or price power, low gross margins restrict long-term EBITDA potential and cushion against shocks.
Volatile ProfitabilityInconsistent earnings—positive in one year then back to losses—signal unreliable cost absorption and execution risk. This volatility undermines forecasting, raises the probability of recurring losses over the medium term, and complicates investor confidence in sustained margin improvement.
Compressed Equity / Balance Sheet PressureOngoing losses that have materially compressed equity weaken the balance sheet cushion and elevate leverage metrics. That reduces financial flexibility, can raise borrowing costs, and increases dilution or refinancing risk if profitable operations or cash generation slip.