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Mark Gongloff

Tech Imitates Tesla in the Wrong Way

An alarming percentage of new companies are burning through cash.

The cash, it burns.

The cash, it burns.

Photographer: Matt Cardy/Getty Images Europe

One reason Tesla Inc. has been in the news lately is because it burns through bushels of cash, leading it to worry about running out of money, leading it to need an attractive stock price, inspiring Elon Musk to tweet a lot in order to scare away short-sellers.

Most public companies are not nearly as entertaining as that (don’t even get me started on Azealia Banks). But an alarming number of them have one thing in common with Tesla: They too burn through heaps of cash. Shira Ovide studied 150 U.S. tech companies that have gone public since 2010 and are still in business and found that 37 percent of them have negative cash from operations – up from 29 percent four years ago.