I think this video doesn't take into consideration one important point - Corporation Tax! Corporate taxes are charged on profits - so the more profit a company declares, the more corporate tax it will pay. As such, companies try to keep their profit declarations low by fiddling with their expenses. This way they can park 'surplus money' (which usually would be considered profit) offshore through transfer pricing and other means. Hopefully, the recent reduction in the federal corporation tax rate to 21% will change this practice. But I do think the historically low profit declarations by companies has a lot to do with their desire to avoid corporate taxes - not because they were genuinely unprofitable! It's just like Milton Friedman says - high taxes distort market incentives!
Rocky Hanoram - It is said that the Stock Market moves depending on the the Profit a Company Makes / Declares. The Values of the Stock Quotes of those that do not declare Profits should be Low & not based on Taxation. Governments both Central ( Federal ) & Local are responsible in dishing out Free Lunches & Tax Holidays to Corporations to set up Shop in their Regions but the burden of their tax es is passed on to Local or Nations People. Apple pays no taxes in USA how about that.
Keshav R No you are not taxed on reinvestment because it's not a profit. It's like most startups or small business you use the profits to buy more equipment, hire employees, etc etc so later you can reap more profits. Companies like Amazon can easily make massive profits but they choose to spend all of there money to build out more infastrucure, services, products, etc so they can get more and more users. You can't tax gross profits because you would be taxing companies before expenses are paid and even Apple and Amazon would go broke and not be able to grow at all let alone smaller companies.
I run a small business, and yes, I do that. I am proud that I don't have incomes. However, I wish to own a foundation, foundation and non-a-profit organizations are a tax-deduction machine.
Focusing on growth rather than profit is largely unsustainable. Cheap money allows such to thrive. Revenue is vanity. Profit is sanity. Cash(flow) is reality.
Because true and seasoned investors think long-term. They see the value in the products and services these companies offer. Uber and Tesla are here to stay as they are disrupting the industries. The other big part is the management of these companies which need to be trustable enough for the investors. Many times, investors invest in people, especially in the early stages. Uber is going public next year. I don't use Spotify, so can't comment on that.
I think there has just been too much cheap capital in the financial markets for nearly a decade, and these sources of capital are willing to fund long term losses.
josefin schwartz see even if one of them gives a big return softbank wins recently it sold 22 percentage of its stake of flipkart ( India's largest online marketplace , bigger than Amazon) for 5-6 billions I guess (that's big) and similarly they invest in many others and if even one of them gets big it's win win situation
With government subsidies, profits don't matter anymore and that's the problem!! A company that is not profitable should go under and close! It's like keeping a person that is brain death alive on life support! AS an investor, I would never put my money in a company that is no making money! What happens the day the goverment is not giving money, I lose my investment??
Chairman of India's largest Pvt bank said this- if one day these loss making companies who are saying losses are an illusion, will tomorrow say that profits too are an illusion..then what are you going to do? And here is CNBC actually proving it..
The amazon way--Don’t take profits, keep reinvesting into capex instead until you achieve total domination to the point that nobody bothers trying to compete with you, and you’re able to collect rents
POWER LAW IS ALWAYS UNDERRATED. Profits always will matter, but exponential growth is the key, as well as mass production, market share, network effects and so. Markets are not unsane. The more the people believe it, the more lucrative is for investors to get into the market. All is about the long term.
Simple, they look at the traffic/users of a product which could mean large profits in the future. Facebook alone is a good example of that. However, it is no secret. Investors are in a race to find these companies.
Market growth is another measure of profit. So yes, it does matter. The ruler of this world sit on large pile of cash. So they don't need more cash at the moment.
all of them just learned how to make a proper tax declaration to sound like they had low profit. So on the paper they look like didn't get much profit...
The day these companies start to make profit they will make bilions of dollars profit every year and pay for losses in 2-3 years.Investors are thinking of long term when there will be hugely popular and profitable.
Oh boy this gonna aged well. TH-cam's been noisy with all these new investors coming telling to buy this buy that to the moon yada yada head granfader you
I think this video doesn't take into consideration one important point - Corporation Tax! Corporate taxes are charged on profits - so the more profit a company declares, the more corporate tax it will pay. As such, companies try to keep their profit declarations low by fiddling with their expenses. This way they can park 'surplus money' (which usually would be considered profit) offshore through transfer pricing and other means. Hopefully, the recent reduction in the federal corporation tax rate to 21% will change this practice. But I do think the historically low profit declarations by companies has a lot to do with their desire to avoid corporate taxes - not because they were genuinely unprofitable! It's just like Milton Friedman says - high taxes distort market incentives!
Rocky Hanoman In this video, she is talking about real losses.
One question though, does corporate tax apply to profits being reinvested within the company?
Rocky Hanoram - It is said that the Stock Market moves depending on the the Profit a Company Makes / Declares. The Values of the Stock Quotes of those that do not declare Profits should be Low & not based on Taxation. Governments both Central ( Federal ) & Local are responsible in dishing out Free Lunches & Tax Holidays to Corporations to set up Shop in their Regions but the burden of their tax es is passed on to Local or Nations People. Apple pays no taxes in USA how about that.
Keshav R No you are not taxed on reinvestment because it's not a profit. It's like most startups or small business you use the profits to buy more equipment, hire employees, etc etc so later you can reap more profits. Companies like Amazon can easily make massive profits but they choose to spend all of there money to build out more infastrucure, services, products, etc so they can get more and more users. You can't tax gross profits because you would be taxing companies before expenses are paid and even Apple and Amazon would go broke and not be able to grow at all let alone smaller companies.
I run a small business, and yes, I do that. I am proud that I don't have incomes. However, I wish to own a foundation, foundation and non-a-profit organizations are a tax-deduction machine.
Just a modern version of the dot Com bubble of 2000
Nope. Dotcom was like premature ejaculation. This is the actual orgasm that was promised.
@@krishnamohan2351 I love you
@@krishnamohan2351 Krishna "Moan"
Focusing on growth rather than profit is largely unsustainable. Cheap money allows such to thrive. Revenue is vanity. Profit is sanity. Cash(flow) is reality.
Forgot to mention the real reason. Quantitative Easing done by US Fed since 2008. Cheap money.
I think she remembered what she wore when she got that bike.🎈
That's because tech companies are in a bubble. For them, profit doesn't matter... it's how much debt they can take.
Smart bud
I blame low interest rates, running a deficit is cheap and pays off in the long term
Because true and seasoned investors think long-term. They see the value in the products and services these companies offer. Uber and Tesla are here to stay as they are disrupting the industries. The other big part is the management of these companies which need to be trustable enough for the investors. Many times, investors invest in people, especially in the early stages. Uber is going public next year. I don't use Spotify, so can't comment on that.
I think there has just been too much cheap capital in the financial markets for nearly a decade, and these sources of capital are willing to fund long term losses.
Wework just sounds like a Library with no noise. lol
Only growth matters
For most of us going into Business, we need profit and profitable ideas. This is simply Education 101, Business 101, Economics 101, Math 101 etc. etc.
Investors are gambling Big time these days on IPOs hoping to find the next Apple or Amazon. Only few lucky ones gonna hit the jackpot. RIP
What about Softbank? they invest bilions and billions in companies that are losing money. Wonder whats going to happen
josefin schwartz see even if one of them gives a big return softbank wins recently it sold 22 percentage of its stake of flipkart ( India's largest online marketplace , bigger than Amazon) for 5-6 billions I guess (that's big) and similarly they invest in many others and if even one of them gets big it's win win situation
Is the USA profitable?
Maybe because Americans are mostly health conscious
And two years later here you are killing it!
Profit or growth.
Investors prefer growth ??
With government subsidies, profits don't matter anymore and that's the problem!! A company that is not profitable should go under and close! It's like keeping a person that is brain death alive on life support! AS an investor, I would never put my money in a company that is no making money! What happens the day the goverment is not giving money, I lose my investment??
Atem S. Some of these investors are multi billionaire so they have money to burn.
Chairman of India's largest Pvt bank said this- if one day these loss making companies who are saying losses are an illusion, will tomorrow say that profits too are an illusion..then what are you going to do? And here is CNBC actually proving it..
The amazon way--Don’t take profits, keep reinvesting into capex instead until you achieve total domination to the point that nobody bothers trying to compete with you, and you’re able to collect rents
I could listen to you talk to me all day about random shit
Please explain What is Toutiao - the chinese internet company ???
is WeWork refer as tech company? it look like we in another dot com bubble
Cool take on top line vs bottom line; expansion vs monetization and so on...
Great Segment.
POWER LAW IS ALWAYS UNDERRATED. Profits always will matter, but exponential growth is the key, as well as mass production, market share, network effects and so. Markets are not unsane. The more the people believe it, the more lucrative is for investors to get into the market. All is about the long term.
Nice report.
Tesla is not a tech company, just to be clear it is an automobile manufacturer.
Simple, they look at the traffic/users of a product which could mean large profits in the future. Facebook alone is a good example of that. However, it is no secret. Investors are in a race to find these companies.
Yes. Just a little but yes.
Market growth is another measure of profit. So yes, it does matter. The ruler of this world sit on large pile of cash. So they don't need more cash at the moment.
all of them just learned how to make a proper tax declaration to sound like they had low profit. So on the paper they look like didn't get much profit...
Automotive corporaton lost billion of net profit in 20 yrs
top bell! thats the kind of question people would only considere on the top of markets.
The U.S dollar is now worth just one fourth cent to one half cent.
A profit or the people as a person in every regard.
Someone talking sense. I think there is a lot of money floating around and it needs to go somewhere.
The day these companies start to make profit they will make bilions of dollars profit every year and pay for losses in 2-3 years.Investors are thinking of long term when there will be hugely popular and profitable.
Oh boy this gonna aged well. TH-cam's been noisy with all these new investors coming telling to buy this buy that to the moon yada yada head granfader you
Yes it does
Strange times.
yeah right
Very strange indeed-I’m not a fan
WeWork is the real deal. But valuation in private fund raising doesn't paint the full picture.
Amazon at 1T
Lmbao WeWork
We are in next big bubble
More like bailout 2.0
2022
Bad anchor
Ofo and Wework are dead