LeEco expanded as quickly as possible over the past couple of years, but that created some problems for the company’s cash flow. After expanding into the US market with a slew of phones and a Vizio acquisition, LeEco is pretty close to being completely broke. Since they sell their phones very close to cost to keep up that growth, it’s hard to turn much of a profit, which is, ironically, a big hurdle to overcome when you’re trying to keep up fast growth like LeEco has done.
One solution for a cash-strapped company is to look for investors, and that appears to be LeEco’s strategy. They’re in talks with an unnamed investor to secure roughly $1.4 billion to keep going, but that’s not making anyone feel better over the company’s financial health.
LeEco has been cutting staff and salaries and securing other funding, but they’re struggling to actually do anything to address the core of their problem. They can keep grabbing cash to slap a bandaid on things, but until they can turn a legitimate profit with their products, things won’t improve long term.
2017 will be a critical year for LeEco, especially if they don’t change course and shift their business model.