Can the EBITDA margin be negative, and what does it signify?

Yes, a company's EBITDA margin can be negative if its operating expenses exceed its revenues and sales for a period.

A negative EBITDA margin signals that the company's core business operations are unprofitable, and it is losing money at an operational level before accounting for interest, taxes, depreciation and amortisation. This is a major red flag for any business.

A negative margin signifies the company has a serious problem with its product pricing, cost management or overall efficiency and needs to take corrective actions quickly. It indicates the business model is flawed and unable to cover basic operating costs through sales revenues.

However, while a positive EBITDA margin is better, it does not necessarily mean the company is in great health.