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To justify the market cap, investors are expecting growth. Unprofitable companies only trade at 7 times revenue when buyers (investors) expect them to grow and
by mathattack 10y ago
To justify the market cap, investors are expecting growth. Unprofitable companies only trade at 7 times revenue when buyers (investors) expect them to grow and eventually become profitable. Otherwise you'd be waiting a long time to get your investment back.
- imagist 10y agoSo investors demand growth. But not only that, they demand sevenfold growth. That's much less abstract. And it's also hilarious and a perfect example of why Twitter is a perfect example of the tech bubble. Twitter is not going to grow in value sevenfold: in ten years they have not even broken even yet.