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Why are so many unprofitable companies the best performing stocks this year?

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Re: Why are so many unprofitable companies the best performing stocks this year?

#71

Post by nabla9 »

xoxoy wrote: post #56
nabla9 wrote: post #4

Small speculative unprofitable growth companies outside the major indexes are usually always the best performing stocks, because stocks in the same category are in the list of worst performing too. They have huge volatility.

lol at “small” Tesla has 10x’d from a year and now at a $420B valuation. That makes it one of the largest companies in the world (I believe top 15) All the companies that fit in this category like Carvana, Wayfair, Overstock etc are now at $10B-$30B valuations. Point is these are not small by any means.

Company size is measured in revenue, not valuation.

Tesla is not small anymore by revenue but it's not in top 100 US companies either.

Re: Why are so many unprofitable companies the best performing stocks this year?

#72

Post by f00zz »

mdorazio wrote: post #67
santa_boy wrote: post #52

Earlier quoted context omitted.

> For a meaningful analysis, you would need to dig into the winning stocks specifically and ask why they're up so much. IMHO rationalization of this is very random at best. Why is Zoom (up >600% YTD) really worth it? Most of the big tech cos. can replace Zoom overnight. I use Google Meet daily without the trivial bells-n-whistles that Zoom offers. Absolutely no adjustments needed! Jio in India (where I am from) would…

I don't disagree. In a lot of cases, like Zoom, there's a stupid amount of free capital floating around due to effectively-zero interest rates, and not many places with decent returns to invest it. So anything that gets hyped as a good place to put it (like tech stocks) gets blown out of proportion and underlying fundamentals don't really come into play. Basically, investors (and the market) aren't rational right now…

> there's a stupid amount of free capital floating around due to effectively-zero interest rates, and not many places with decent returns to invest it

That's probably the reason, but it would be great if all this liquidity were going to companies that are actually building innovative tech. I mean, we're 20% into the 21st century already, where's my asteroid mining ETF?

Re: Why are so many unprofitable companies the best performing stocks this year?

#73

Post by mdorazio »

f00zz wrote: post #72
mdorazio wrote: post #67

Earlier quoted context omitted.

I don't disagree. In a lot of cases, like Zoom, there's a stupid amount of free capital floating around due to effectively-zero interest rates, and not many places with decent returns to invest it. So anything that gets hyped as a good place to put it (like tech stocks) gets blown out of proportion and underlying fundamentals don't really come into play. Basically, investors (and the market) aren't rational right now…

> there's a stupid amount of free capital floating around due to effectively-zero interest rates, and not many places with decent returns to invest it That's probably the reason, but it would be great if all this liquidity were going to companies that are actually building innovative tech. I mean, we're 20% into the 21st century already, where's my asteroid mining ETF?

I'm with you. I would love to plow investment dollars into SpaceX or Planetary Resources, but it seems like most of the real innovative companies are either still private or got acquired by companies I don't want to invest in.

Re: Why are so many unprofitable companies the best performing stocks this year?

#74

Post by eeZah7Ux »

ComputerGuru wrote: post #57
dustingetz wrote: post #41

Earlier quoted context omitted.

USA is all in, expect military to prevent the pop

What will they do, put a gun to consumers’ heads to force them to buy exercise bikes and the latest iPhone models?

Not: put a gun to people in other countries heads to force them to sign contracts that are very favorable to the US

https://en.wikipedia.org/wiki/Gunboat_diplomacy

Re: Why are so many unprofitable companies the best performing stocks this year?

#75

Post by xoxoy »

nabla9 wrote: post #71
xoxoy wrote: post #56

Earlier quoted context omitted.

lol at “small” Tesla has 10x’d from a year and now at a $420B valuation. That makes it one of the largest companies in the world (I believe top 15) All the companies that fit in this category like Carvana, Wayfair, Overstock etc are now at $10B-$30B valuations. Point is these are not small by any means.

Company size is measured in revenue, not valuation. Tesla is not small anymore by revenue but it's not in top 100 US companies either.

not sure what that has to do with my response. the claim was that “small” companies can multiply their valuation more easily.

Re: Why are so many unprofitable companies the best performing stocks this year?

#76

Post by xoxoy »

d23 wrote: post #65
xoxoy wrote: post #56

Earlier quoted context omitted.

lol at “small” Tesla has 10x’d from a year and now at a $420B valuation. That makes it one of the largest companies in the world (I believe top 15) All the companies that fit in this category like Carvana, Wayfair, Overstock etc are now at $10B-$30B valuations. Point is these are not small by any means.

Why would you use the market cap as a measure for large when we're discussing overvaluation? It seems like more fundamental measures (revenue, earnings, market share) would be more appropriate.

what does that have to do with my response?

Re: Why are so many unprofitable companies the best performing stocks this year?

#78

Post by MattGaiser »

Don't most of these companies stand to benefit enormously from long term changes people think the pandemic will bring?

Telsa benefits from any environmentally stimulus.

Peloton benefits if we all move to more rural areas than downtowns and instead use them over a gym.

Moderna is a vaccine company. You are betting on them getting a big payout.

Re: Why are so many unprofitable companies the best performing stocks this year?

#79

Post by jariel »

sharkweek wrote: post #11

I don’t know much about the stock market outside of throwing any savings I can muster into a vanguard fund, but articles like this remind me of the scene from Silicon Valley where the Pied Piper team is talking about finding a revenue stream. Their investor, the Mark Cuban caricature, Russ Hanneman butts in and yells at them about the dangers of showing revenue and how it proves you might only be a 2x-er. "It's not a…

There is reality to this, but it's generally for private companies raising money that can hold their cards close to their chest.

Pinterest, I believe, would not tell investors the 'results of their ad tests' precisely because they didn't want investors to be able to hard-value the company.

Once the 'analyst in the investor' gets enough data, that mind will crunch the numbers quickly to figure out the 'net present value' etc. and come up with a number.

If they don't have that data, then some of them can be allowed to 'dream'.

With public companies, there should be enough data on the table for people to make reasonable conclusions, but investing is taking a pop-culture angle these days and it's problematic.

WeWork valuations were crazy.

It's hard to see how Palantir is worth much.

Peleton and Tesla should be controversial, but at least the have solid foundations.

Re: Why are so many unprofitable companies the best performing stocks this year?

#80

Post by dylan604 »

santa_boy wrote: post #52
mdorazio wrote: post #10

"Almost one in five of these money-losing companies is up 100% or more this year. There are some huge gainers on this list including companies like Overstock.com (+1055%), Tesla (+429%), Peloton (+348%) and Moderna (+285%). But there are also plenty of big losers of these money-losing firms. More than one-quarter of these stocks are down 10% or more this year while almost 50 names have fallen 30% or more in 2020." So…

> For a meaningful analysis, you would need to dig into the winning stocks specifically and ask why they're up so much. IMHO rationalization of this is very random at best. Why is Zoom (up >600% YTD) really worth it? Most of the big tech cos. can replace Zoom overnight. I use Google Meet daily without the trivial bells-n-whistles that Zoom offers. Absolutely no adjustments needed! Jio in India (where I am from) would…

>Most of the big tech cos. can replace Zoom overnight.

If that's true, why haven't they? Streaming live video isn't simple. Multiply that times the number of users in one meeting multiplied by the number of calls, and not simple gets even more complicated. Also, big tech will do the obvious thing and make you be a member/user of their platform. G would require a Gmail account, FB require FB account, etc. The one attraction to Zoom to me is that no account required to attend.

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