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>In no world is the SEC's role to determine whether or not a company's business strategy qualifies them to go public or not. Profitability is objective...let’s

>In no world is the SEC's role to determine whether or not a company's business strategy qualifies them to go public or not. Profitability is objective...let’s not pretend what I’m suggesting is the SEC subjectively making a decision on a business judgement or business plan. Simply you want to register a security for public offering show a GAAP profit...I understand that’s not “how it works” or I wouldn’t have suggested it “should” be considered, I never said anything about SEC subjectively determining worthiness of an investment.

wbl 7y ago
Why shouldn't public investors be allowed to support ventures that won't show a profit for a while? Think drug discovery oil drilling etc.
askafriend 7y ago
Their business is doing extremely well. They can turn on profitability any time they want. As an investor, I would not want them to turn a profit at this stage with so much headroom left, especially internationally. If they choose to go for profitability this early on, then I take it as a negative signal. Profit is too simple of a number to focus on. It doesn’t tell any kind of story by itself. But it’s a tempting number to latch onto.
briandear 7y ago
So if you want to fundraise, you must be profitable? If that’s the case, what’s the point of fundraising? A lemonade stand is more profitable than Slack, but the upside potential for Slack is vastly greater. So showing a GAAP profit suggests that a lemonade stand is more valuable and worthy of an investment than Slack? Should Tesla be delisted? How about Amazon? They didn’t make a profit for the majority of their existence. GAAP profits as a condition of listing is just ridiculous. Almost all green energy companies lose money, so what you seem to be implying is that the public shouldn’t be allowed to invest in the Teslas of the world because they aren’t profitable? An IPO is a fundraising event. That’s all. If we are to say that no company should be able to fundraise if they have loses, then very, very few companies would ever have access to capital. An IPO isn’t an endorsement by the SEC, not should it be.
EpicEng 7y ago
You realize that you can very easily be proven wrong, right? Amazon was "losing" more money in each year leading up to their IPO. By your logic we all should have been protected from investing in this obvious scam of a company, right? If you could go back in time and dump money into Amazon stock, would you? Of course you would, because profitability is obviously too simplistic a measure to gate companies from going public. Also, the SEC isn't my nanny and I'm capable of reading an S1 to make my own decision. You seem to have an incredibly narrow understanding of the economics behind these companies.
- will_brown 7y ago
  >By your logic we all should have been protected from investing in this obvious scam of a company, right? Based on my logic? I never said slack/uber/Lyft are scams, I even admit they may be good investments when they IPO...I even said profitability is not the full picture. I never said the SEC was your nanny, I never said you couldn’t read an S-1...though based on your assertions I have to question you reading comprehension. Maybe you could give me a comprehensive breakdown of how the market would be different if amazon did have to post profit before IPO, since you are so sure we would all be worse off...even non investors. Are investors, public markets and private markets really all better off? Is it possible amazon wouldn’t dominate and there be other companies competing in the space? Better jobs even more investment opportunites? I don’t think you could answer any of those questions with certainty.

wbl 7y ago

Why shouldn't public investors be allowed to support ventures that won't show a profit for a while? Think drug discovery oil drilling etc.

askafriend 7y ago

Their business is doing extremely well. They can turn on profitability any time they want. As an investor, I would not want them to turn a profit at this stage with so much headroom left, especially internationally. If they choose to go for profitability this early on, then I take it as a negative signal. Profit is too simple of a number to focus on. It doesn’t tell any kind of story by itself. But it’s a tempting number to latch onto.

briandear 7y ago

So if you want to fundraise, you must be profitable? If that’s the case, what’s the point of fundraising? A lemonade stand is more profitable than Slack, but the upside potential for Slack is vastly greater. So showing a GAAP profit suggests that a lemonade stand is more valuable and worthy of an investment than Slack? Should Tesla be delisted? How about Amazon? They didn’t make a profit for the majority of their existence. GAAP profits as a condition of listing is just ridiculous. Almost all green energy companies lose money, so what you seem to be implying is that the public shouldn’t be allowed to invest in the Teslas of the world because they aren’t profitable? An IPO is a fundraising event. That’s all. If we are to say that no company should be able to fundraise if they have loses, then very, very few companies would ever have access to capital. An IPO isn’t an endorsement by the SEC, not should it be.

EpicEng 7y ago

You realize that you can very easily be proven wrong, right? Amazon was "losing" more money in each year leading up to their IPO. By your logic we all should have been protected from investing in this obvious scam of a company, right? If you could go back in time and dump money into Amazon stock, would you? Of course you would, because profitability is obviously too simplistic a measure to gate companies from going public. Also, the SEC isn't my nanny and I'm capable of reading an S1 to make my own decision. You seem to have an incredibly narrow understanding of the economics behind these companies.

will_brown 7y ago
>By your logic we all should have been protected from investing in this obvious scam of a company, right? Based on my logic? I never said slack/uber/Lyft are scams, I even admit they may be good investments when they IPO...I even said profitability is not the full picture. I never said the SEC was your nanny, I never said you couldn’t read an S-1...though based on your assertions I have to question you reading comprehension. Maybe you could give me a comprehensive breakdown of how the market would be different if amazon did have to post profit before IPO, since you are so sure we would all be worse off...even non investors. Are investors, public markets and private markets really all better off? Is it possible amazon wouldn’t dominate and there be other companies competing in the space? Better jobs even more investment opportunites? I don’t think you could answer any of those questions with certainty.