RingCentral added to zombie stocks list by equity research firm New Constructs

Cloud-based communication company RingCentral has been added to the list of zombie stocks compiled by equity research firm New Constructs.

The research firm, which uses machine learning and natural language processing to parse corporate filings and model economic earnings, describes RingCentral Inc. RNG, -9.94% as a cash incinerator at risk of declining to $0 per share.

RingCentrals stock was trading at $443 per share in February 2021 and while the stock is down some 90% since then, we believe shares have much more room to fall, wrote New Constructs CEO David Trainer, in a note. We recommend investors avoid this zombie stock.

RingCentrals stock has fallen 80.9% in 2022, outpacing the S&P 500 indexs SPX, -0.52% decline of 24.3%.

See Now: Affirm added to zombie stocks list by equity research firm New Constructs

Since 2017, RingCentral has burned through $2.5 billion in Free Cash Flow excluding acquisitions, according to New Constructs.

Citing RingCentrals latest undefined, New Constructs notes that the company had $306.5 million in cash and cash equivalents and $113.2 million in long-term investments at the end of June. Even with $420 million in cash on the books as of June 30, 2022, RingCentrals cash balance can only sustain its TTM cash burn rate for another 2 months from the end of September, wrote Trainer. In other words, a capital raise or significant change in business operations is needed to remain a going concern.