By: John S. Morlu II, CPA
Many people—employees, observers, and even casual bystanders—struggle to understand why a business would intentionally deprioritize short-term profits. To them, profit is the scorecard. If it’s missing, they assume confusion, recklessness, or delusion.
That view is understandable—and wrong.
This topic addresses a simple but often misunderstood truth of modern markets: a company does not need to be profitable to be extremely valuable. Over the past several decades, investors have paid extraordinary sums for businesses that grew rapidly, captured markets, and became difficult—or impossible—to replace, even before those companies generated profits, and in many cases without profits at the time of sale.
The disconnect comes from perspective. Most people think in income statements. Capital markets think in equations.
Valuation is not a moral judgment about profitability. It is a mathematical assessment of scale, control, optionality, and future cash-flow dominance, heavily influenced by behavioral finance. Growth rate, market size, defensibility, switching costs, network effects, and timing matter far more than whether profits show up early.
This is why many of the world’s richest individuals accumulated vast wealth before their companies ever produced meaningful profits. Even losses—when deployed strategically—can increase enterprise value if they accelerate dominance or eliminate competitors. History is full of examples where reported losses coexisted with extraordinary valuations.
What looks irrational at street level is often perfectly rational at capital-market altitude. Understanding this distinction separates operators from observers, builders from commentators, and enterprise creators from income earners. High-growth businesses are not designed to optimize quarterly profits; they are designed to maximize payout day—when scale, inevitability, and strategic position converge.
That is the lens through which modern value is created.
Examples: Big Valuations Before Consistent Profits
1. Uber
- IPO valuation: ~$82B
- Lost billions annually for years
- Profits came much later, after massive scale
2. Snap Inc.
- IPO valuation: ~$24B
- Years of net losses post-IPO
3. Twitter
- IPO valuation: ~$14B
- Rare profitable years; inconsistent earnings
- Sold to Elon Musk for ~$44B
4. WeWork
- Peak valuation: ~$47B
- Never profitable
- One of the most famous VC implosions
5. Spotify
- IPO valuation: ~$26B
- Thin margins; mostly loss-making for years
6. Peloton
- Peak valuation: ~$50B
- Lost billions before collapsing
7. DoorDash
- IPO valuation: ~$72B
- Profitable only briefly and marginally
8. Lyft
- IPO valuation: ~$24B
- Never consistently profitable
9. Slack
- Acquired by Salesforce for ~$27.7B
- Still losing money at acquisition
10. Zoom
- Rare case: modest profits after explosive growth
- Valued >$100B before profits were durable
11. Pinterest
- IPO valuation: ~$12B
- Profits came much later
12. Robinhood
- IPO valuation: ~$32B
- Never consistently profitable
13. Instacart
- Valuation: ~$39B (private peak)
- Marginal or adjusted profits at best
14. Zillow
- Valuation >$20B
- Lost billions in its iBuying experiment
15. Carvana
- Valuation >$60B at peak
- Massive losses
16. Coupang
- IPO valuation: ~$60B
- Loss-making for most of its life
17. Rivian
- IPO valuation: ~$100B
- No profits; huge cash burn
18. Nio
- Valuation in the tens of billions
- Persistent losses
19. Unity Technologies
- IPO valuation: ~$13B
- Never consistently profitable
20. Alibaba
- IPO valuation: ~$168B
- Profits existed later, but valuation exploded far ahead of profit certainty
21. Instagram
- Sold to Facebook in 2012 for $1 billion
- Had no revenue and no profits
- Value was based purely on user growth and strategic threat
22. WhatsApp
- Sold to Facebook in 2014 for $19 billion
- Almost no revenue, tiny team
- Value was global reach + network effects
23. TikTok
- Peak valuation: ~$300–400 billion (2021–2023 estimates, internal and market-based)
- Timeframe: Founded 2016; global dominance by 2019–2020
- Profitability at scale: Loss-making for several years outside China
- Reality: Massive early cash burn funded by ByteDance
- Value driver: Unmatched global attention, algorithmic dominance, and data scale—not near-term profits
24. Amazon
- IPO: 1997
- Consistent profitability: Not until 2018–2019
- Timeframe: ~22 years prioritizing growth over profits
- Valuation milestones:
- ~$438M at IPO
- $1 trillion market cap by 2018
- Reality: Reinvested nearly all cash flow into infrastructure, logistics, and AWS
- Value driver: Long-term market dominance and cash-flow optionality, not early earnings
25. Nvidia
- IPO: 1999
- Early years: Volatile earnings, thin margins, frequent reinvestment
- Valuation vs. profits: Market value repeatedly ran far ahead of reported earnings (2016–2022)
- AI inflection: 2023–2024
- Valuation milestone: Surpassed $2 trillion market cap in 2024
- Reality: Investors priced in future platform dominance long before AI profits fully materialized
- Value driver: Strategic positioning in compute infrastructure, not short-term margins
The Pattern: This Is the Real Lesson
These companies sold stories, not income statements:
- Growth > Profits
- Market dominance > Margins
- Narrative > Numbers
- Future optionality > Present cash flow
Venture markets don’t ask: “Are you profitable?”
They ask:
“If this works, how big does it get—and can anyone stop it?”
Hard Truth for High-Growth Categories
This logic applies most strongly to:
- SaaS
- Platforms
- Marketplaces
- Infrastructure software
- Fintech / Govtech / AI tools
Profitability too early can actually cap valuation. What matters is credible scale, defensibility, and inevitability.
The Simple Takeaway
These companies were not bought for what they earned. They were bought for what they controlled:
- Users
- Attention
- Infrastructure
- Data
- Future markets
Profit was expected later—sometimes much later.
In modern markets, the big question is not: “How much money do you make today?”
It is:
“If this works, how big does it get—and who can stop it?”
That is the logic behind Instagram, WhatsApp, TikTok, Amazon, Nvidia, and so many more—and why profits are often not the first milestone, but the last one.
Author: John S. Morlu II, CPA is the CEO and Chief Strategist of JS Morlu, leads a globally recognized public accounting and management consultancy firm. Under his visionary leadership, JS Morlu has become a pioneer in developing cutting-edge technologies across B2B, B2C, P2P, and B2G verticals. The firm’s groundbreaking innovations include AI-powered reconciliation software (ReckSoft.com), Uber for handymen (Fixaars.com) and advanced cloud accounting solutions (FinovatePro.com), setting new industry standards for efficiency, accuracy, and technological excellence.