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Zombies

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Zombies
Companies that continue to operate even though they are insolvent. Also known as living dead.
    
Zombies are companies that continue to operate even though they are insolvent or near Bankruptcy. Zombies often become casualties to the High costs associated with certain operations, such as research and development. Most analysts expect zombie companies to be unable to meet their financial obligations.
    
Because a zombie's life expectancy tends to be highly unpredictable, zombie stocks are extremely risky and are not suitable for all investors. For example, a small biotech firm may stretch its funds extremely thin by concentrating its efforts in research and development in the hope of creating a blockbuster drug. If the drug fails, the company can go bankrupt within days of the announcement. On the other hand, if the drug is successful, the company could profit and reduce its liabilities. In most cases, however, zombie stocks are unable to overcome the financial burdens of their High burn rates and most eventually go bankrupt. Also known as the "living dead" or "zombie stocks".
Posted by  Privatebanking.com
 
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