Ask the Fool: Profitable or unprofitable?

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A: Not necessarily. Many great companies start out losing money as they establish themselves. You need to be confident that they have a path to profitability, and that they’re likely to get there. In their early years, they may spend more than they earn on marketing campaigns, hiring top talent or expanding their reach in order to compete and grab market share.

Amazon is a perfect example here – even when it was very successful, it posted years of losses due to heavy spending. But it was clear that it could turn profitable just by reining in spending and hiking prices. So there’s no…

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