Eli5: How can large companies be worth (valued at) so much when they do not make any net profit?
In: 7
Because they’re spending all the money they make to make themselves even more valuable.
If you started a business in your garage, and took all the money you made and bought land and a building to be your new headquarters, you’ve added assets to the company’s value while generating less profits (because you used the profits money to buy the stuff).
The company is more valuable though because it owns more stuff of value.
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