Terrible article. Yes it bounced back off of the lows but it’s still not close to profitable and well under the IPO price. Most of the employees got burned and have not recovered.
The primary concern is long-term survival and growth, not immediately getting to profitable. They have plenty of cash at $2.2 billion.
Last three quarters of gross profit improvement:
$116m -> $172m -> $223m
Gross profit margin for those quarters:
36% -> 44% -> 50%
Operating expenses for those quarters:
$432m -> $477m -> $451m
Meanwhile quarterly sales went from $320m to $446m.
That's exactly what the market wants to see. Their path to ending the losses is extremely clear at this point.
Call me naive, but I’m still of the opinion that a business shouldn’t be business if it can’t sustain itself.
Biotech companies, as one example, frequently can't sustain themselves when they IPO. They IPO as a means to raise capital to pursue sustainability, to grow the business - develop product etc - using investor money. That's one of the reasons the public markets exist, to expose investors to potential upside.
Tesla is very clearly a business and has lost money every year of its existence.
Amazon lost money for its first seven years, including for several years following its IPO.
Workday and ServiceNow have been money losing businesses for their entire histories. ServiceNow took 15 years to get to profitability in its most recent quarter. They ran losses in the pursuit of faster growth.
Atlassian and Shopify have piled up annual losses for most (all?) of their histories.
Would investors be better off without exposure to Shopify at a $3.x billion market cap at its IPO? It's now $36 billion. Investors get to ride their tremendous business growth (with some obvious risk), which is likely to result in eventual solid profitability.
ServiceNow started as a PaaS and it was hard to sell. Companies didn’t know what to do with it and it wasn’t until they did ITSM (IT Service Management) that it took off. They ate the lunch of their competitors like BMC Remedy.
Snap is just another ad company that can fail quickly of users leave.