A company's value is equal to its discounted profitability, adjusted for risk. A company that loses money now but has a 10% chance of making ten billion dollars

A company's value is equal to its discounted profitability, adjusted for risk. A company that loses money now but has a 10% chance of making ten billion dollars a year in ten years is worth more than a company that makes a million dollars a year with little prospect for growth. My own primary business, the Ruby on Rails Tutorial, is highly profitable, but I'd still trade its income in a heartbeat for, say, 1% of AMZN or CRM.