[throwawayyipyip]

Well, to some extent it is. You can argue both ways, and in Zapier's case, I'd say it's overvalued as the 10-15 range assumes obtaining a monopoly. I don't see how Zapier will do that since there's also IFTTT and other services I've tried.

With that said, consider huge successes like Amazon. Huge successes like Amazon have been generating much more profit compared to what they were projected to earn in 2010 [1]. I picked 2010 since 2 things are out of the way: the tech boom and the credit crunch. Moreover, people understood that Amazon was here to stay. Despite that, 10 years later, they make 20 times as much profit. If investors knew that 10 years ago, I'd bet that the price would not have been about 130$ since according to Google Finance, the diluted earnings per share (EPS) is about 42$, which is about 30% of the 2010 stock price.

Mind you, in 2010, investors already put crazy multiples on stocks like Amazon. Yet, their prediction on how much money it would make has been underestimated back then. If the estimates of 2010 were correct, you'd expect Amazon to now have an EPS of like 6.5$ (130/20) since by conservative measures, the P/E ratio is in the 15-25 range.

Correct me if I'm wrong on this, I'm not the sharpest cookie in the jar.

[1] https://www.macrotrends.net/stocks/charts/AMZN/amazon/net-in...

[2] https://www.google.com/finance/quote/AMZN:NASDAQ?window=MAX

[valzam]

However, Amazon never pays dividends. And you probably cannot really vote on anything with your stock either. So what's the point? There is an interesting article about Facebook with a similar opinion. Zuck owns the majority vote and they never pay dividends. What's the point of owning the stock?

[chii]

> What's the point of owning the stock?

to sell for capital gains when it is higher in the future. Dividends aren't the only way to generate a profit. And for a lot of high income earners, dividends are very tax inefficient as well.

[ByteJockey]

There's a term for when everyone buys something just because you can sell it to someone else for more later.

It's called a bubble.

[sjg007]

Yep but when our 401ks auto buy in there's a bit of a stop gap. Also I think the bigger reason is that with tech people expect a nonlinear impact. Amazon being the example. So not only revenue break even but market growth and new market opportunities.

[chii]

It's only a bubble if it busts. And stock does have value, and if the business it represents have growth, the equivalent value must also grow.

And in any case, if someone else feels that the stock is worth more, and thus pay more for it, what's the problem?

[mikeryan]

The term of art is actually “greater fool theory”

[DougN7]

Sounds exactly like Bitcoin!

[jurassic]

Dividends are taxable while price appreciation doesn’t become taxable until you sell. Unless you need income, it’s more tax efficient to shareholders if the company reinvests free cashflow in continued growth.

[mdeck_]

The point is that (a buyer expects that) the value of the stock itself is increasing. Whether it pays dividends is not the pertinent question.