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Be careful that you are not basing your argument on whether you personally like lemonade. If a kid's lemonade stand increased its revenue from $1B/year to $100
by pu_pe 2mo ago
Be careful that you are not basing your argument on whether you personally like lemonade.
If a kid's lemonade stand increased its revenue from $1B/year to $100B/year in two years, we would be paying serious attention to their product. People seem to love that lemonade! At this level of increased demand, maybe it's ok to let this kid borrow $1T over 5 years, because even if his growth slows down to 2x/year instead of 10x/year, he will still be covering that investment. That's hopeful and risky, but not at all insane in my view.
- crote 2mo agoAnd what's going to happen to those hundreds of billions of investments in equipment that won't be needed until well after it has become obsolete and uneconomical to operate? What happens to the stock price of a company that missed its revenue targets by a factor of 5? Making extreme growth predictions and not realizing them is fine for small startups. Not so much when it comes to trillion-dollar companies - especially when they have taken on massive loans to pay for it. A 2x-instead-of-10x result? That's an economy-killing crash.
- pu_pe 2mo ago> What happens to the stock price of a company that missed its revenue targets by a factor of 5? It depends. Tesla is a good example of how those things are not as clear cut as you might think. The world is starving for more AI compute. Nvidia's GPUs are selling for 2x or 3x their former price, RAM prices increased even more, all because demand is huge right now. If anything buying those chips at bulk discount and then selling them right back to consumers would already be profitable.