It's the inflated demand created by retail traders sitting at home . Most of them invested in the companies highly active in the media like TSLA, ZOOM etc.
Why are so many unprofitable companies the best performing stocks this year?
91–100 of 140 posts
Re: Why are so many unprofitable companies the best performing stocks this year?
#92Put another way (by Jim Cramer):
For data warehouse plays, revenue growth + profit margin should be > 40.
In other words, you can focus on high sales growth to plan for future profits, but if your sales growth is lagging you should be turning good profits now.
Re: Why are so many unprofitable companies the best performing stocks this year?
#93This is a topic as old as time. I never get why people “complain” about what other people pay for things at a price they themself seem silly. It doesn’t impact you. It’s their money. If they feel they can have an advantage in the long term investing in companies at a high valuation, then sure Everything thinks what they’re building is worth a lot of money but get jealous when they see high valuations from others :)
The possibility that a lot of that investment might be coming from pension funds or from government-insured banks is concerning.
Re: Why are so many unprofitable companies the best performing stocks this year?
#94Earlier quoted context omitted.
What will they do, put a gun to consumers’ heads to force them to buy exercise bikes and the latest iPhone models?
Close, but you're missing a step: create new money, give it to Americans so they can afford to buy exercise bikes, put a gun to the head of anyone who dares challenge the US dollar hegemony.
Didn't Germany already try this exact method and fail following their post-WWI sanctions? They had to pay back something like $132 billion gold marks London Schedule of Payments required Germany to pay ~ $132 billion gold marks and issued a bunch of currency leading to hyerinflation? And resentment, populism and nationalism rose and things went pear shaped from there.
Re: Why are so many unprofitable companies the best performing stocks this year?
#95I wish more companies would separate the cost of _current revenue_ vs the growth investment of future revenue. I.e. Say it cost 30M to generate 100M, and 150M was invested in R&D and future sales. Even though it has negative revenue (100 - 150 - 30), the products that were sold are clearly profitable. Which imho is very different than saying the company is losing 80M a year.
Re: Why are so many unprofitable companies the best performing stocks this year?
#96I 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…
> outside of throwing any savings I can muster into a vanguard fund, I know the popular advice for the last decade has been "stock market always goes up! 8% a year!" but do you really believe it's wise to align your future investment strategy with the general well being of the economic. I'm not saying don't have a 401k (well if you really press me, I will say that), but if all of your savings are directly tied to the…
The thinking behind this strategy is: there is enormous incentive to make the market perform well, which is why society will make the market perform well, with whatever means necessary. The incentive to make the market fail is much smaller (and even those shorting the market do eventually have an incentive for a well-doing market, because the money they make is worthless if it's not spendable for stuff, which depends on a well-doing market).
You can clearly see this play out right now in terms of current worldwide monetary policy: for the sake of a well-doing market, central banks are printing money like there's no tomorrow.
Re: Why are so many unprofitable companies the best performing stocks this year?
#97It is very simple. There are two things happening here. One: the Fed has invested trillions buying everything under the sun (not just t-bills) to prop up the markets and make it look the economy is fine. Two: interest rates are being held artificially low by the Fed and have been for a while. So people are desperate for returns and the only place to get it is equities. It is a pyramid scheme and must pop someday. Rea…
You're correct, but I think the "mystery" here is why a basket of unprofitable companies is outperforming broader indices.
Investors are desperate for growth, and the prospect of investing in a company that could 10x in value over a very short span of time is just so tempting.
It might seem outlandish, but there are many startups that have exploded right after IPO recently, so investors are asking themselves, what's the next hot stock, and how can I spot it before its valuation explodes?
Re: Why are so many unprofitable companies the best performing stocks this year?
#98I'm surprised that Overstock is simultaneously still running at a loss and is seeing rising share values.
Every time I've tried to shop there, I've found a terrible selection, middling prices, and a mediocre UI. (To be fair, every e-commerce giant has a mediocre UI.) I see them casually mentioned in lists of "Amazon alternatives", but I've never once had someone recommend Overstock for a specific purchase. I don't think I've even talked to anyone who actually buys there.
Are they growing gangbusters in some niche I'm not aware of?
Re: Why are so many unprofitable companies the best performing stocks this year?
#99I 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…
> outside of throwing any savings I can muster into a vanguard fund, I know the popular advice for the last decade has been "stock market always goes up! 8% a year!" but do you really believe it's wise to align your future investment strategy with the general well being of the economic. I'm not saying don't have a 401k (well if you really press me, I will say that), but if all of your savings are directly tied to the…
I see it as a hedge against inflation. In boom times with soaring markets, there is (usually) considerable inflation. If you ride the market, you probably won't see outsize returns but you won't lose purchasing power to inflation either.
For this reason I frequently wonder whether I should invest HSA funds exclusively in medical stocks. If healthcare gets more expensive, my HSA has probably grown. If healthcare gets cheaper, my HSA might shrink, but that's fine because healthcare is cheap.
Re: Why are so many unprofitable companies the best performing stocks this year?
#100I 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…
Here's a thought experiment about a theoretical company that can obtain incredible valuation. You start out with some money from friends and family, and you use this money to sell $100 bills for $50. Lots of takers. Soon enough, you go to a VC and show them your revenue stream, and tell them with more capital you can make the margins much better. They hand you a few million, and you start selling more $100 bills for…
This is more or less how PayPal started, yeah.
(When they sold the $100 for $80 they also onboarded them to do other things, once there were enough of them. Eventually they reduced the payout to selling $100 for $95.)