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Jakarta Post

High valuation vs profit: Chicken-egg issue for unicorns

  • Nidya Ramalia Novita

Jakarta   /   Tue, December 3 2019   /  01:25 am

JP/Wendra AjistyatamaThe rapid rise and sudden collapse of a few tech companies has raised questions about the sanity of the stock market and investor valuation, which appeared to assign higher values to tech companies the more their losses mounted. Some of today’s most hyped companies are often not profitable businesses. Their bottom lines are less attractive. Many of these loss-making companies are sexy to investors and alluring to consumers as well. That is because these new breeds of companies discount heavily on the market price for consumer benefit. The 2019 initial public offerings (IPOs) include few numbers of start-ups — Uber, Lyft and Pinterest — American tech unicorn companies that floated with multibillion-dollar valuations and all of them are booking significant losses. Uber, which is estimated to lose US$5.4 billion this year, went public in the United States a few mo...