6 ms·

What is a zombie company?

• brailsafe 4y ago
  I would guess companies that had no hope of showing a profit, and just running on either debt or VC
• kwatsonafter 4y ago
  >a thing created by credit excesses!
• lumost 4y ago
  A company which is uncompetitive and potentially unprofitable. In a cheap money environment, it’s easy to pass the buck on these things. In startup land, think about the parts of the business that get humored when the company takes a round. Maybe the business doesn’t work, maybe it’s a vanity project for some executive/board member. Without a compelling reason to upset people, these can be allowed to go on for a long time.
  • bergenty 4y ago
    Isn’t this most tech companies until a certain point that are unicorns now?
    • lumost 4y ago
      Yes, and that should raise eyebrows in our industry - it’s easier to burn money for dubious growth when money is sitting around. Uber Et. Al. May finally need to prove they can run at a profit.
• lubujackson 4y ago
  Companies issue corporate bonds, which are basically loans broken up and sold on the open market. So with a near 0% interest rate, many companies took advantage by issuing billions of dollars of bonds at low rates, so much so that even at rates of like 2-3% the companies are struggling to pay the interest on these bonds. Maybe someone can enlighten with hard numbers, but last I looked dead-man-walking companies like Macy's and TJMaxx have billions and billions of bonds outstanding while their annual revenue is a fraction that. Now as rates rise they can't go to the well again and all these bonds will end in default. Who gets hurt? Pension plans, mutual funds, all the "safe" funds... so buyer beware with corporate bonds right now.
  • deleted 4y ago
    [deleted]