Eli5: How can large companies be worth (valued at) so much when they do not make any net profit?
In: 7
The value of a firm is all of its future cash flows (cash in minus cash out) discounted to the present.
Getting to this value of course requires conjecture, and investors will disagree about what those future cash flows might be. Those who believe they will be higher will buy stock; those who think it will be lower will sell it. The balancing point between the two determines the price of the stock, and the price of stock * outstanding shares is the market valuation of the company.
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