this post was submitted on 07 Sep 2024
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A lot of valuation for these companies is not based on profitability, but rather on growth. So as long as you can show investors that you’re growing, they will buy in.
Also, what are the chances they don’t have a cheaper option of using GCP/AWD/Azure/etc?
Valuation is only useful for an exit strategy. They've already IPO'd. If they don't show profit, the stock will collapse.
Counterpoint: Tesla before they made a profit
Tesla gave cars away for free to gain market share?
Their stock didn’t crater when they didn’t return a profit
They got money from the IPO. The money let them build a plant to sell cars at a profit. In 2016, they had burned through the IPO money and weren't selling the model 3 yet. Musk later admitted they were months from bankruptcy. The stock price was around $12 a share.
Selling cars at a profit is what caused their stock price to rise.
Nitro makes plenty
I'm unfamiliar with their games. They have no ads? Or are you talking about Discord?
Discord - Nitro
And if no one bought Nitro or advertised games Discord would run out of money.
That's the same as using Roblox without giving them any money.
This isnt speculation here, they do, and they make A LOT from nitro subscriptions and server boosts.
Yes but if everyone used their services without paying, they would go bankrupt. Just like using Roblox without paying costs them money.
Don't forget every user generates a base income, for example from visiting and using boosted servers (other users pay), ad insights and other data mining
Ad insites is 3rd party ads which as I said Roblox doesn't do (yet).