One must love the projections of >50% YOY growth for 5 straight years.
Why not continue for the next 5 ? Maybe they will find customers on Mars.
This while situation is very strange - there are some big companies pouring tens of billions into it (Alphabet, Meta) - since they don't have anything better to do with the money printers they have, but there are several others whose valuations are based on completely unrealistic projections where their expected revenues in 5-10 years represent 99% of their current 'value'.
Traditionally one is supposed to return money you don’t have anything better to do with to shareholders in dividends, but that is sadly out of fashion with tech companies.
A dividend is one mechanism for financial rigor and focus, since shareholders don't like dividends being cut. Having large piles of cash lying around is a temptation to use it for sub-optimal returns, or even worse, empire-building.
Another reason is that the shareholder functions more like an owner. Without a dividend the managers have a less clear responsibility to the shareholders. Maybe they act wisely, maybe not, but there is no real constraints on their behavior. The stock then acts more like a lottery ticket than owning a business, because you don't get anything out until you sell. Whereas, if the company pays you something because you own shares and therefore you own a piece of the profits, the ownership structure and the management structures line up better.
Why not continue for the next 5 ? Maybe they will find customers on Mars.
This while situation is very strange - there are some big companies pouring tens of billions into it (Alphabet, Meta) - since they don't have anything better to do with the money printers they have, but there are several others whose valuations are based on completely unrealistic projections where their expected revenues in 5-10 years represent 99% of their current 'value'.