3 ms·
> but otherwise obviously makes no sense, it's antithetic to the very idea of a business. How does it NOT make sense? The purpose of a business like this is no
by slap_shot 4y ago
> but otherwise obviously makes no sense, it's antithetic to the very idea of a business.
How does it NOT make sense? The purpose of a business like this is not to generate some short term profit. These are winner-take-all markets - they're playing for complete and utter domination of an entire product category.
Their Q1 revenue grew 37% YoY - how on earth would you care about profit over what they doing here? They should keep hitting that as hard as they can.
- bonestamp2 4y agoYep, exactly what UBER is doing and what Tesla has found themselves doing with high spending on their Texas and Berlin Gigafactories. It's a short term pain for domination... expand fast and be the market leader in every country before someone else beats you to it. Then, soak in the profits.
- jacobr1 4y agoWhich works when the unit economics are good. You can take the profit from an operating business, and just inject it back in the business to grow. That sometimes looks like an unprofitable business, but the test is: "if the company freezes growth tomorrow" would it be profitable? Teslas are profitable, once you pay off the amortized cost of a factory. It isn't clear that uber is profitable. They had 5-10% gross margins pre-IPO, and it has gone negative since.