The goal of every business is to make money. Sometimes, however, that doesn’t happen immediately. Quarter after quarter may pass by without the company generating a profit.
For public companies, this isn’t necessarily a killer right away. Often investors understand long-term business goals and are willing to keep their money in the long enough to see a major pay-off.
Just take a look at Amazon. For years, the company was notorious for not turning a profit. This wasn’t because they were failing. Rather, Amazon favored investing heavily in itself over being profitable. These investments eventually paid off: this summer, the company made a profit of $92 million that sent its stock soaring and pushed its market value up to $264 million—ahead of Walmart.
Of course, along with the successes, there are stories of failure. Sony is currently experiencing a series of losses due to waning interest in its TVs and cameras, which have traditionally been its bread and butter. HP is in the same boat, with a loss of over $12 billion.
Among the many unprofitable companies out there, some may come as a surprise. The question is whether they can eventually make it past the profitability line.
The member-run news and social network known for its cluttered appearance and extremely rabid userbase is owned by Advance Publications. Although the site boasts 169 million unique monthly views, it’s had an extremely hard time monetizing the traffic.
The problem is that the Reddit user community is extremely against most forms of monetization, including ads. They have also responded negatively to attempts to censor the site by eliminating hateful subreddits.
Reddit is trying to be creative by implementing features like Reddit Gold, which gives users a more personalized experience in exchange for cash.
Unfortunately, the mentality of Reddit users has created a catch-22 that I can’t see the site ever successfully getting out of.
Uber is the creative transportation solution that connects people in need of a ride to Uber drivers via a convenient smartphone app. It’s gaining a lot of traction in our frugal world and has received lots of venture capital.
Although Uber doesn’t release its financial statements, leaked documents indicate that it is still highly unprofitable.
In this case, however, this has a lot to do with the company’s rapid expansion across the world—including markets like and China. Overhead has gone way up.
Nevertheless, this looks like another Amazon case. With time, Uber will start making a profit.
Snapchat is a convenient app that lets you send pictures, text, and photos to people of your choice. The “snaps” you send are only available for viewing for a limited time of your choosing (one to ten seconds). This makes it appealing to people who don’t want their correspondence recorded forever.
The userbase is currently at 100 million. It’s generating somewhere in the neighborhood of $3 million with its first round of ads.
Despite the revenue, it Snapchat has yet to turn a profit. Nevertheless, the forecast looks good if it can continue to grow its userbase at current rates and keep the attention of advertisers like Apple and Toyota.
Shazam is a super-handy app that lets you identify unknown songs by comparing them against an immense sound database. The latest version integrates with the iOS virtual assistant Siri.
Shazam is one of the top apps in the world and has more than 100 million monthly active users. It’s gone through fund-raising rounds and is now valued at $1 billion. Shazam makes its money by referring people to iTunes and Spotify via links.
It’s a pretty ingenious strategy, and it’s working so far. So much so that Carlos Slim has seen the potential of the app and invested $40 million of his own money.
It may be shocking news, but Twitter isn’t profitable. In its defense, it continues to grow and is starting to show higher revenue, although it is also incurring higher costs.
Twitter is big. It’s an important part of social media and internet marketing. There’s probably no doubt about its staying power in the long-term. But it can probably make some tweaks to increase profitability.
For instance, a better paid advertising system. The current way of promoting a business on Twitter is clunky doesn’t inspire an image of good results.
Also, Twitter could better cooperate with government entities to crack down on Terrorists who use the platform. This would greatly enhance it’s public image.
Profitability isn’t always immediate, but reaching that point eventually is the purpose of every business. Those that don’t run effectively are likely to get left behind in the dust.