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by ignoramous 44 days ago
> Should these companies be valued the same

By who? Public money is looking for dividends (profits) not growth?

2 comments

Public money is looking for profits. Dividends are one way to get there. A better way to get to larger profits is selling the stock after it gets much more valuable. In the example above the growing company has a good chance of being worth much more a few years later, and that increases the value.
If indeed the public is looking for dividends, why is Amazon, a company that has never paid a dividend, such a valuable company?

Amazon has ~10 Billion outstanding shares and the current market price for one of those shares is ~$240.

If folks only care about dividends, why would anyone buy an Amazon share at that price?

> why is Amazon, a company that has never paid a dividend, such a valuable company?

You'd hope every publicly-traded long term minded company operates the same way Amazon does. Reinvestment of money they themselves earn in "growth" and still retain a trickle in profits.