COVID-19’s retail disruption would follow, contributing to BBBYQ becoming one of the most-shorted Wall Street meme stocks by 2021.Īs interest rates began to escalate in March 2022, BBBYQ had $5.2 billion in debt and only $4.4 billion in assets by November. The one-time Fortune 500 company had operated more than 1,000 stores at its zenith, but it would fall behind major chains like Amazon and Walmart even with the ubiquitous couponing that became part of its brand. Yet for anyone paying attention years before, monsters were already circling. In April 2023, Bed Bath & Beyond (BBBYQ) filed for bankruptcy after the home goods store couldn’t generate enough revenue to cover expenses after a lackluster holiday season. Zombie companies can surface in any industry-from banks to bed linens. When such conditions accelerate-as they certainly did in 2022–23-such companies’ lifeblood can drain, sending them staggering toward investors, the government, or the courts for any chance at survival. “Zombie” firms can surface in any economy but particularly when rising interest rates and economic headwinds encircle cash-strapped, indebted companies. To spot a zombie company, investors commonly zero in on its interest coverage ratio.ĭiversification can help fight off zombies. Overleveraged companies may start to show weakness during rising rate environments because their debt costs can increase faster than revenue.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |