Uber has never once turned a profit, and is allowed to continue running their business. If you’re a small business owner running an ebay or ecom business, and you claim losses for 3 out of 5 years in a row, it’s likely that the IRS will audit you, and could deem you a hobby. Amazon is often cited as not generating a profit for many years, but is now profitable. For them, it was somehow okay to run a business making no profit! So like, how come small businesses can’t claim losses, but big corps can?

  • Caveman@lemmy.world
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    2 months ago

    There is nothing preventing business from running without making a profit as long as they pay any expenses or bonds that are due.

    The current tech setup depends on high stock valuations. They issue stock, sell it at a high rate and use that to pay expenses. The sale of stock does not count as net positive in revenue since they are effectively selling a part of their business to investors, making them “owe” their new shareholders equal the amount they gained from them.

    As long as investors are interested and the business is growing it’s possible to keep this going for a long time and never pay taxes since they spent everything they gained.

    If they are not able to pay their expenses they will have to file for bankruptcy like every other business, whether it’s restructuring bankruptcy, transfer of ownership of dissolution.

    So why can’t small businesses do the same? They absolutely can, but the money they get from selling stock is nowhere close. These tech companies are sold sometimes at 20x the revenue where small businesses are likely going to get 20x profit or less.

      • Caveman@lemmy.world
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        2 months ago

        I think most tech companies are over valued, not gonna lie. In a hypothetical situation where you know all future dividends of the company the value of the share should be the sum of the future dividends discounted by number of years at an interest rate. If the company is never going to pay out dividends then it’s “real value” is zero.

        “Real value” as in it has no value as a commodity like gold or a collectors item. Looking at you Tesla.

    • Kecessa@sh.itjust.works
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      2 months ago

      And the same thing is true for private businesses, most of the time they’re only private in the sense that the “shares” aren’t listed on the stock market, there’s still a bunch of investors behind the scene that each own a certain % of the company, it’s not just the figurehead that acts like they’re the sole owner (see Twitter with Musk and the documents released recently showing how much money for the purchase came from third parties).