What is Company risk? (also known as Business risk, Business failure risk and Single stock risk)
The risk that you will lose money simply because you chose to invest in a certain corporation and going forward it fails to keep up with competitors.
How this risk plays out in the real world
Nov 18, 2024: US no-frills pioneer Spirit Airlines files for bankruptcy protection
Nov 02, 2024: TGI Fridays files for bankruptcy
May 20, 2024: Red Lobster declares bankruptcy
Nov 07, 2023: WeWork — once one of the world’s hottest startups — declares bankruptcy
Aug 07, 2023: 30,000 workers bid goodbye to 99-year-old Yellow as it files for bankruptcy
May 08, 2023: Weight-loss chain Jenny Craig declares bankruptcy
April 17, 2023: David’s Bridal files for bankruptcy after laying off more than 9,000 workers
Mar 17, 2023: SVB Financial, former parent of Silicon Valley Bank, files for bankruptcy
Nov 11, 2022: Sam Bankman-Fried steps down as FTX CEO as his crypto exchange files for bankruptcy
May 15, 2020: J.C. Penney Files For Bankruptcy As Lockdowns Take Their Toll
May 04, 2020: J. Crew declares bankruptcy: What this means for shoppers
Apr 17, 2020: Why Hertz landed in bankruptcy court when its rivals didn’t
Sep 29, 2019: Forever 21 files for bankruptcy, will close up to 178 stores in U.S.
Feb 22, 2019: Kraft Heinz shares plunge more than 28% after $12.6B loss, SEC investigation and dividend cut
Oct 16, 2018: Sears declares bankruptcy, but for its proud workers the decline was years in the making
Jun 25, 2018; Toys ‘R’ Us will close for good this week
Jan 09, 2018: GoPro’s Karma Drone Is Officially Dead / GoPro stock plunges after poor earnings report
Apr 05, 2017: Shoe chain Payless files for bankruptcy protection, closing 400 stores
Nov 08, 2016: GoPro recalls Karma drone after power failures, shares drop
Sep 04, 2016: Abercrombie & Fitch’s attempts to rebrand have totally backfired
May 18, 2016: Sports Authority to close all remaining stores
Sep 11, 2014: RadioShack posts tenth straight quarterly loss
Sep 20, 2013: BlackBerry to lay off 4,500 employees, or 40 percent of global workforce after announcing staggering $1 billion loss
Jun 25, 2013: Barnes & Noble abandons Nook tablets after heavy losses
May 02, 2008: Linens ‘n Things files for bankruptcy
Connection to other risks
Company risk encompasses Execution risk and Timing risk because both of these pertain to issues having to do with the company.
Learn more
Visit the Corporation types page.
How investors can manage this risk
- Don’t put too much money into any one corporation’s stock.
- For each stock you purchase, set a “stop”, a price below which if the share price falls, your broker will automatically sell your shares. This will prevent you from suffering large losses.
- Invest in mutual funds, index funds, and ETFs, each of which buys you a piece of dozens to a hundred or more corporations that the fund holds.