Will Technology Companies Run Out Of Cash?

Discussion in 'General Trading Discussion' started by Buyonthedips, Mar 15, 2020.

  1. Buyonthedips

    Buyonthedips Senior Investor

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    Many of the world’s best-known technology companies are located and listed on the US stock market. Many of these companies are literally years from profitability and depend upon regular refinancing to continue trading. So, in the event of the coronavirus led sell-off, will some technology companies simply run out of cash with nowhere to raise new funds?
     
  2. gowiththeflow

    gowiththeflow Senior Investor

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    Simple answer, YES. Some of the best known names in the sector will crash and burn in the short to medium term. Even when things do return to some kind of normality, the fund raisings of years gone by will be harder to secure. Investors will be scared of investing in non-profitable businesses and those that do invest will want greatly improved terms compared to past fund raisings.
     
  3. longtermbull

    longtermbull Administrator Staff Member

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    Those companies built purely on hope value will fall by the wayside. There just wont be enough investors willing to take a flier in the short to medium term.
     
  4. gowiththeflow

    gowiththeflow Senior Investor

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    These companies, no income, no profits and living on a wing and a prayer will be the first to crash and burn. Lets see who is left holding the baby at the end :)
     
  5. longtermbull

    longtermbull Administrator Staff Member

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    If I were in Apple’s shoes I would be unlocking the key to that huge war chest they have and looking to cherry pick some of the best up-and-coming technology companies as a separate arm to the company. Many of these companies need finance now and there is every chance Apple could pick up some huge equity stakes. The option, companies refuse relatively expensive funding and fail tomorrow.
     
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