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Are unprofitable companies good investments?
By Loopholes Singapore  •  January 4, 2022
Are unprofitable companies like a match that will eventually burn out?
It’s puzzling for sure when you see some companies that have been consistently non-profitable appreciate in terms of their share price over time. More interestingly, this is not a short phenomenon like a pump and dump event but rather a trend that lasts for years. The simple explanation is that these companies are usually tech companies and they have a high potential for growth in revenue. However, even with consistent growth in revenue, those companies are still loss-making because they have to burn cash to gain market share and retain consumers. Perhaps, their strategy is to burn enough cash to drive competitors out of business or to simply replenish their cash pile with cheap money or new investors. The point that I cannot really wrap my head around is how can they eventually become profitable, hence I would like to use this post to share more about one...
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By Loopholes Singapore
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