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The bottom line is the most important part of any functioning business.
Profit after costs, expenses, and taxes.
The money that the founders and investors in companies get to put back into their pockets for the risk and effort they put into a business.
Sounds like business 101 right? And it kind of is.
A business that doesn’t turn a profit is like a freezer that kind make ice, it’s more or less pointless.
And sure there are things like non-profit charity organizations out there but most businesses exist to make money!
So why is it that some of the biggest companies in the world are not turning profits? Why is it that they don’t even plan to?
The rise of so-called zombie companies or companies that have not and have never run at a profit are raising more and more eyebrows in the investing world.
These businesses are getting too big to ignore as by some estimates over 10% of the s&p500 (an index of the largest companies in America), is now made up of these companies that don’t serve the one central goal of being in businesses.
What’s more, is that this issue is not just endemic to a particular industry, dozens of major companies and countless smaller businesses in every sector of the economy from energy, retail, medical, telecommunications, and of course technology are in this profitless boat together.
So what is going on here?
Why would anybody invest in a business that is unprofitable?
What impacts does this apparent misallocation of resources have on the economy?
And finally,
Will the economic fallout of 2020 show these businesses for what they really are?
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