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Friday, December 1, 2017

Companies that Burn Cash Have Low Probability of Long-Run Success

Five outliers - Chesapeake Energy, Netflix, Nextera Energy, Tesla and Uber - have collectively lost $100bn in the past decade. Shumpeter argues three elements are needed to skirt reality: a vision, fast growth, and financing.

Of the current members of the Russell 1000 index, since 1997 only 37 have lost $1bn or more for at least two years in a row. Of these, 21 still lose money.

Economist: Firms that burn up $1bn a year are sexy but statistically doomed

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