What Is a Zombie Company?

By Keith Noonan – Updated Dec 4, 2025 at 12:10 AM EST

Key Points

A zombie company is an old business, reliant on debt, unable to reduce principal amounts.
Such firms often can't recover when interest rates climb, making new loans expensive.
Investing in zombie companies is risky and should involve careful individual assessment.

Even if a company is generating lots of revenue and posting profits, it's important to also consider debt and interest expenses. Investors have to be very cautious when it comes to putting money behind zombie companies.

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Start-Up

A young company developing innovative solutions to solve significant problems for a large, scalable market with growth potential.

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About the Author

Keith Noonan is a contributing writer at The Motley Fool covering technology, consumer goods, and other sectors. He holds a bachelor’s degree in English from Boston College.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Walmart. The Motley Fool has a disclosure policy.