Can a publicly traded company be unprofitable?

Question

seems to me a contradiction in tems, but here is an example:
Cott Corp is an unprofitable Soft Drinks company that trades on the TSX. (Toronto)

Answer 1

Unprofitable and share price or the market perception of the company are not much related.
Worth of comany = the present value of future cash flows. So if a company is loss making now but it's due to the fact that whatever it earns it reinvests again to fuel it's fast growth i.e. though the current cashflows are negative it is building heavy future cashflows hence market value of the comapny increases (i.e. share price inc) instead of it being unprofitable.
Best example is Amazon - for years it was unprofitable but it's share price always went up. Reason - it reinvested in developing a massive customer base and sales and distribution network.

Otherwise also, any plc can be unprofitable with no good reason i.e. they just had a bad year and hence their market price will go down.

Answer 2

Many companies like this. Look at Yahoo, I not sure of the whole History. But, when it went Public, many thought this not worth the $4-5 to buy. Some felt Yahoo was a good possible, well not look at their stock in a few Weeks, was around $40 I think, and it has split 5 times since it went public!!!
Unprofitable companies are usually in the Start-up or Reorganization mode. People will speculate that it will become something in the Future and invest. Some make money, some go broke.

Answer 3

There are many unprofitable companies. Just look at the car companies.

Sometimes, it is something that the company might be unprepared for and can fix in the future.

For example, insurance companies had a tough time last year with all of the hurricane claims. A lot of them lost money last year, but they adjusted and should be fine this year. Another example is any company that uses oil/gas. Last year could have been very tough for them.

Answer 4

There are plenty of unprofitable publicly traded companies. There were especially many during the Internet craze...

Answer 5

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Answer 6

Sure, lots of them are. Especially Biotech, in which there is a long period of research and development. No money coming in, the stock price is all based on speculation about future earnings.

Answer 7

Darn right it can.. and it can be corrupt, too. Look at Enron and the thousands of people thrown into poverty instead of getting the retirement pensions they deserved.