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This is what jumped out at me: "The company pulls in more than a billion dollars a quarter in revenue but still operates at a loss" I'm at a loss for words

deleted 3y ago
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binsquare 3y ago
These companies operate at a loss in order to invest in growth for future profits. Not saying it will work out but amazon famously was unprofitable for the longest only because it kept investing back into itself for growth
- al_borland 3y ago
  They weren’t operating at a loss though, right? I thought the profits of Amazon were basically negligible, as profits were getting reinvested. I read that as different than operating at a loss, which would imply their costs exceed their revenue.
  - passwordoops 3y ago
    I'm not sure about Amazon, but I know Uber was the more recent poster-child for the "operate at a massive loss to win market share then Jack up prices later when customers are locked in" strategy to keep the funding going. I don't see that strategy working again for a long time
    - al_borland 3y ago
      Amazon for sure did this with ebooks, but I don’t think the overall business was operating at a loss. All those profits were used to build out new areas of the business, like AWS.
      - hayd 3y ago
        There was _brief_ periods of loss, but only when they had a lot of cash on hand... they were putting in basically all their profit back into the business. https://www.macrotrends.net/stocks/charts/AMZN/amazon/net-income https://www.macrotrends.net/stocks/charts/AMZN/amazon/net-in... That's a completely different strategy to investing money the company doesn't have that will (eventually) require additional outside capital/funding rounds.
paulddraper 3y ago
Sounds like they're getting closer to profitability.
- StimDeck 3y ago
  It’s a decision, they could become profitable yesterday, but what about tomorrow? They are betting for a bigger payday later.
  - ushakov 3y ago
    The reality is probably that they're distributing enormous bonuses to higher ups. Why care about the profitability, when you're getting paid anyways?

deleted 3y ago

[deleted]

binsquare 3y ago

These companies operate at a loss in order to invest in growth for future profits. Not saying it will work out but amazon famously was unprofitable for the longest only because it kept investing back into itself for growth

al_borland 3y ago
They weren’t operating at a loss though, right? I thought the profits of Amazon were basically negligible, as profits were getting reinvested. I read that as different than operating at a loss, which would imply their costs exceed their revenue.
- passwordoops 3y ago
  I'm not sure about Amazon, but I know Uber was the more recent poster-child for the "operate at a massive loss to win market share then Jack up prices later when customers are locked in" strategy to keep the funding going. I don't see that strategy working again for a long time
  - al_borland 3y ago
    Amazon for sure did this with ebooks, but I don’t think the overall business was operating at a loss. All those profits were used to build out new areas of the business, like AWS.
    - hayd 3y ago
      There was _brief_ periods of loss, but only when they had a lot of cash on hand... they were putting in basically all their profit back into the business. https://www.macrotrends.net/stocks/charts/AMZN/amazon/net-income https://www.macrotrends.net/stocks/charts/AMZN/amazon/net-in... That's a completely different strategy to investing money the company doesn't have that will (eventually) require additional outside capital/funding rounds.

paulddraper 3y ago

Sounds like they're getting closer to profitability.

StimDeck 3y ago
It’s a decision, they could become profitable yesterday, but what about tomorrow? They are betting for a bigger payday later.
- ushakov 3y ago
  The reality is probably that they're distributing enormous bonuses to higher ups. Why care about the profitability, when you're getting paid anyways?