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Per #1, you are correct in theory. However I can counter with Amazon and Tesla, which have been increasing revenue rapidly but making losses for years. And th
by pdq 10y ago
Per #1, you are correct in theory. However I can counter with Amazon and Tesla, which have been increasing revenue rapidly but making losses for years. And their stocks are near all time highs. So I would say Wall Street prefers profits, but as long as you can keep increasing revenue, your stock will continue to go up regardless.
- potatolicious 10y agoI'd argue there's a big difference between companies with positive gross margins and companies with negative gross margins, though both may be making losses in total. Amazon most certainly has positive gross margins - and instead chooses to reinvest profits aggressively. Tesla is less certain, but I think a far cry from some of the unicorns that continue to run on deeply negative gross margins with the expectation that scale/future tech/vague fantasies will save them. On the other hand many unicorns don't currently have business models where they are selling dollars for more-than-a-dollar.