Corporate America is having a mixed performance this year as concerns about technology companies’ valuations remain. Stocks have also reacted to the highly hawkish actions of the Federal Reserve and Donald Trump’s tariffs.
Some well-known companies have filed for bankruptcy this year as their cash burn accelerated. This article reviews some of the top names that have filed for bankruptcy protection and identifies others that may follow suit. These names include Canoo (GOEV), Fisker (FSR), Nikola (NKLA), 23andMe (ME), and Forever21.
Canoo (GOEV)
Canoo is one of the popular companies that filed for bankruptcy this year after running out of money. Unlike other firms, Canoo filed for a Chapter 7 bankruptcy, where a company ceases to operate and its assets are sold off to pay creditors. This explains why Canoo’s website has gone dark.
Canoo’s bankruptcy was easy to predict, as we warned in many articles: here, here, here, and here. Like other Tesla rivals, Canoo was burning so much cash in an unsustainable manner. As its stock crashed, it became impossible to raise cash by selling shares. The most recent Canoo news is that Anthony Aquilla, the CEO, was buying all its assets out of bankruptcy for $4 million in cash.
Fisker (FSR)
Fisker is another company we’ve lost. It was a Tesla rival that filed for bankruptcy protection in 2024 as csh burn accelerated.
Fisker’s bankruptcy situation was different than that of Canoo in that it was already manufacturing vehicles and selling them to customers. The challenge, however, was that shipping vehicles from Austria to the United States was a logistic nightmare that became too expensive to handle.
Fisker was also burning cash, suffered a brand reputation damage when MKBHD delivered a bad review, and also had an expensive recall.
Nikola (NKLA)
Nikola is another tech company that we’ve lost this year. Like with Fisker, we predicted Nikola’s bankruptcy, as you can read here, here, and here. Nikola filed for Chapter 11 bankruptcy protection, which allows a company to negotiate and restructure its operations.
In many instances, companies often emerge from the Chapter 11 bankruptcy process and thrive. However, in Nikola’s case, the chances of this happening are low because of the business the company is in.
Nikola manufactured hydrogen trucks that are more expensive than diesel ones, leading to low demand. Most importantly, there is no adequate infrastructure to support these vehicles in the US. This makes it difficult for any company to takeover the company as operating it will be more expensive.
23andMe (ME)
The most recent company to file for bankruptcy was 23andMe. Like the other companies, this bankruptcy was easy to predict, which we did here. The company has been going through major challenges in the past few years. It suffered a big hack that exposed data of millions of companies.
23andMe company had a core business problem: what to do after carrying out genetic testing. That’s because customers only do genetic testing once, and they don’t do the DNA testing again.
The company sought to grow its business in other areas. It wanted to become a leading player in data, where it sold its data to companies like those in the biotech industry. It also aimed to become a top player in research. All these initiatives were slow and expensive to implement.
Forever21
Meanwhile, Forever21 also filed for bankruptcy in March. It cited its high debt load from between 10k and 25k creditors. Forever21 blamed its bankruptcy on the rising competition from the likes of Shein and Temu, and weak demand in the US. It noted that these firms were taking advantage of the de minimis exemption that helped them avoid paying taxes.
This is the second time that Forever21 has filed for bankruptcy protection, having done so in 2021.
Potential bankruptcies
Other companies will likely file for bankruptcy in the next 12 to 24 months. The most notable of these firms that are burning cash fast are Mullen Automotive, Faraday Future, Workhorse Group, Wheels Up, Children’s Place, and Allbirds.
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