Re:SpaceX Revenue Doubled to $4.6B in 2022 Versus 2021
by VHRanger on Thursday August 17, 2023 @06:39PM
(#37169188)
There's a difference between accounting profits and economic profits.
Growing a company that loses on its unit economics (eg. WeWork) ought not to make founders rich
Re:SpaceX Revenue Doubled to $4.6B in 2022 Versus 2021
by lamontcg on Thursday August 17, 2023 @08:39PM
(#37170194)
You're assuming that the only way for a company to not post profits is for all its margins to be flat-to-negative.
If the company has high operating margins and high growth then it makes sense to take those profits and reinvest in capital and R&D to make the company bigger. That is the definition of an efficient economic machine builds itself, and the way to a very good stock for the investor.
That is different from the pathological stock with flat operating margins which is growing on debt, spending $1 to make less than $1 at the margins and will only consume itself as it grows.
And learning to tell the difference between those two requires learning to read 10-K's, you can't just look at the net earnings bottom line.
This assumes that the business is, of course, growing though and growing at a faster rate than the economy and its competitors, and that it has a positive return on capital from the core of the business.
A growing company with high return on capital which is not aggressively reinvesting in itself would be a red flag.
This should go in one of those "Myths that Engineers Believe about Finance" that all companies that don't produce profits are bad.