Investments

Forty Percent Of US-Listed Companies Report Losses

US Companies Reporting Losses Nears 40 Pct

The share of listed companies in the U.S. that are losing money is nearing 40 percent, which is the highest level since the 90s outside of a recession, according to a report by The Wall Street Journal.

This time, there are no recessions and stock market indexes are at near or almost record highs. Some of the industries that are losing the most money include healthcare companies (at 42 percent of the loss-making companies) and tech stocks (17 percent).

The hardest hit are smaller companies. About 75 percent of the 100 biggest companies that reported losses rose in the past year, mainly because big companies that report losses actually show growth, which doesn’t bother investors as much as when small companies lose money.

In the pool of the smallest 80 percent of companies that lose money, there has been an increase in those that have seen losses for three straight years. This proportion went up after the last two recessions and didn’t fall back down. Because many smaller companies get dominated by bigger ones, they get squeezed out of the market, which hampers their ability to raise money.

This should concern investors, the Journal noted, because there could be a long-term decrease in competition. The tolerance for loss should also be concerning, because it can allow for new businesses to get financing beyond what they are worth.

In the past three months, Tesla shares have doubled and General Electric shares are up 44 percent. Those are the two most valuable loss-making companies.

Despite its losses, Tesla is still very attractive to investors, and posted a rare profit in the most recent reported quarter. The company has a market value worth $89 billion, which is more than Ford and General Motors combined.

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New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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