Many companies without actual profits are trading at near cash value or some even below, far down from their highs early last year. I've seen a decent amount of post highlighting cash balance as a plus for buying the stock. As in “yes they are burning money guys, but look theres this pile of cash they are sitting on that will last them for a little while atleast”.
The problem is that we are in an inflationary environment. To simply put it we can all agree that sitting on a large pile of cash isn't exactly ideal right now. We see high shipping costs, high material costs, higher wage demands etc. Basically we see rampant inflation all across the board. Some of these companies have widening losses and even though they could still be sucessful the cost of their revenue is likely to increase with varying amounts depending on the industry they are in. In addition raising capital becomes increasingly difficult as many of these stocks are trading anywhere between 40 to 90 percent (in extreme cases) down from their ATHs. With the upcoming rate hikes taking on debt will also become more expensive overtime. Now just to be clear I'm not saying don't buy stock X because they are not profitable. I'm saying that the situation these companies are in isn't improving. Inflation is expectex to increase and the global economy isn't exactly in an ideal place right now. There's a lot of uncertainty and if we do land in an economic recession many of these recent IPOs SPACs and hype stocks will probably go bankrupt.
Just my 2 cents. Let me know what you guys think.
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