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Profits don't (really) matter. If your revenue is growing 100% YOY, and your profit is -10%, who cares? If your costs aren't growing as fast as your revenue, th
by eanzenberg 7y ago
Profits don't (really) matter. If your revenue is growing 100% YOY, and your profit is -10%, who cares? If your costs aren't growing as fast as your revenue, then it's easy to turn a profit if you choose. Companies choose not to because it hurts them long-term. They choose to grow and enter new markets as fast as possible to get a foothold.
- burntoutfire 7y agoAre blue chips like Coca-Cola entering new markets so much?
- eanzenberg 7y agoPeople who invest in Coca-Cola are interested in dividend growth. People who invest in Amazon, Apple, Google, MSFT are interested in them entering new markets.
- bulletsvshumans 7y agoGrowth only matters to the degree that it will eventually lead to higher dividends though, from the perspective of shareholders. At some point companies (or the companies that acquire them) need to yield a dividend or else it's all a Ponzi scheme.
- eanzenberg 7y agoYep, and some stocks are priced for a date decades away.
- robmccoll 7y ago> If your costs aren't growing as fast as your revenue, then it's easy to turn a profit if you choose. Doesn't that make a lot of assumptions about assets, expenditures, and business model? If I start a business handing out $0.99 to anyone that gives me $0.90, I think I could easily grow revenue at a 10% loss for as long as investors were willing to fund it.
- eanzenberg 7y agoIf your business is selling $0.99 for $0.90, then its costs are growing FASTER than its revenue. You are describing UBER vs. someone like AMZN.
- john_moscow 7y agoIf your revenue grows 100% YoY and the profit keeps declining, your costs ARE growing as fast, as your revenue.