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Comment by will_brown | Hacker News Reader

That’s not the point/issue though. The markets are regulated to protect consumers/investors...private companies can’t just have unregistered public offerings to non accredited investors...so it’s not just “up to you to assess the investments” there are rules and nothing is stopping additional rules to not permit registration of a public offering when the company is operating at a $150,000,000.00 annual loss or more to the point any loss.

Obviously not a popular idea here where everyone is trying to get in early and dump the bag on someone else, but that’s kinda the point of protections, some people won’t like them.

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It's not an unreasonable position. To the annoyance of many here, for example, there are investments that are limited to high net worth individuals. It's not that big of a stretch to imagine additional regulations (whether from the SEC, the major exchanges, or a combination thereof) on which companies are allowed to go public.

It's not a popular idea here because:

  Capital is extremely cheap
  Markets are at record highs
  FOMO in tech right now is extremely strong

I can't wait to see the sentiment in two years.

The question is... right now, is it more like 1995 or 2001?

That can only be answered in hindsight.

People said bitcoin was a bubble. Can't wait to see the excuses and rationalizations when this one pops.

Yes, it will pop... but timing the market is impossible. We may have a good 4 to 5 more years of this.

The rules are about what information is disclosed. The difference is that with public companies, there are rules about what actually gets disclosed and how often. That's why the general public is allowed to invest. It's about how much information is available, not what that information actually is. Investors need to determine whether or not they invest.

In no world is the SEC's role to determine whether or not a company's business strategy qualifies them to go public or not. That would be an absolute disaster.

>In no world is the SEC's role to determine whether or not a company's business strategy qualifies them to go public or not.

Profitability is objective...let’s not pretend what I’m suggesting is the SEC subjectively making a decision on a business judgement or business plan. Simply you want to register a security for public offering show a GAAP profit...I understand that’s not “how it works” or I wouldn’t have suggested it “should” be considered, I never said anything about SEC subjectively determining worthiness of an investment.

Why shouldn't public investors be allowed to support ventures that won't show a profit for a while? Think drug discovery oil drilling etc.

Their business is doing extremely well. They can turn on profitability any time they want.

As an investor, I would not want them to turn a profit at this stage with so much headroom left, especially internationally.

If they choose to go for profitability this early on, then I take it as a negative signal.

Profit is too simple of a number to focus on. It doesn’t tell any kind of story by itself. But it’s a tempting number to latch onto.

So if you want to fundraise, you must be profitable? If that’s the case, what’s the point of fundraising? A lemonade stand is more profitable than Slack, but the upside potential for Slack is vastly greater. So showing a GAAP profit suggests that a lemonade stand is more valuable and worthy of an investment than Slack?

Should Tesla be delisted? How about Amazon? They didn’t make a profit for the majority of their existence. GAAP profits as a condition of listing is just ridiculous. Almost all green energy companies lose money, so what you seem to be implying is that the public shouldn’t be allowed to invest in the Teslas of the world because they aren’t profitable?

An IPO is a fundraising event. That’s all. If we are to say that no company should be able to fundraise if they have loses, then very, very few companies would ever have access to capital. An IPO isn’t an endorsement by the SEC, not should it be.

You realize that you can very easily be proven wrong, right?

Amazon was "losing" more money in each year leading up to their IPO. By your logic we all should have been protected from investing in this obvious scam of a company, right? If you could go back in time and dump money into Amazon stock, would you?

Of course you would, because profitability is obviously too simplistic a measure to gate companies from going public. Also, the SEC isn't my nanny and I'm capable of reading an S1 to make my own decision. You seem to have an incredibly narrow understanding of the economics behind these companies.

>By your logic we all should have been protected from investing in this obvious scam of a company, right?

Based on my logic? I never said slack/uber/Lyft are scams, I even admit they may be good investments when they IPO...I even said profitability is not the full picture.

I never said the SEC was your nanny, I never said you couldn’t read an S-1...though based on your assertions I have to question you reading comprehension.

Maybe you could give me a comprehensive breakdown of how the market would be different if amazon did have to post profit before IPO, since you are so sure we would all be worse off...even non investors. Are investors, public markets and private markets really all better off? Is it possible amazon wouldn’t dominate and there be other companies competing in the space? Better jobs even more investment opportunites? I don’t think you could answer any of those questions with certainty.

The investors see the big number in the first table of the S-1. What more do you want?

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