I can't believe I used to read the Post for real. Is this a real article.
Dear John: How is it that Uber is valued at billions of dollars yet continues to lose millions? All they care about is sales.
They get investors’ money, and their executives make insane money, and all the while the company isn’t profitable! I don’t get it.
I thought when you run a company the focus is on being profitable. Small businesses are run that way, or they’d have to close up shop. I owned a small business, so it was important to be able to pay your help and expenses. J.B.
Dear J.B. Companies in a hot field are financed because of their potential.
Amazon, for instance, didn’t show a profit for many years. That was because the company was expanding and using the loans and investors’ money for that purpose. And look what the company is now worth: $782 billion.
So those early investors took a risk on management, and they made a fortune.
What I don’t get are companies like Sears and Kmart that are able to stay in business for years even though they aren’t profitable and aren’t ever going to be profitable again. Why do investors and banks give them money?