You are costing them money to provide servers and bandwidth for free. They don’t (as of yet) have 3rd party ads giving them any revenue from users that don’t buy anything. More freeloading users doesn’t help IPO because they already IPO’d.
The idea that more freeloading users is a good thing is an absurd idea from the 2000 dotcom crash. I once had a potential customer call me and tried to negotiate for free web hosting under the premise that they would increase hits to my website. I laughed at them saying, “You don’t understand how any of this works. I have to buy servers for thousands of dollars. I have to pay tens of thousands a month for upstream bandwidth because I wasn’t a Tier 1 ISP. Driving traffic to my site costs me more money.”
A lot of valuation for these companies is not based on profitability, but rather on growth. So as long as you can show investors that you’re growing, they will buy in.
Also, what are the chances they don’t have a cheaper option of using GCP/AWD/Azure/etc?
They got money from the IPO. The money let them build a plant to sell cars at a profit. In 2016, they had burned through the IPO money and weren’t selling the model 3 yet. Musk later admitted they were months from bankruptcy. The stock price was around $12 a share.
Selling cars at a profit is what caused their stock price to rise.
Not true, you’re pumping their numbers up, which increases their valuation.
You are costing them money to provide servers and bandwidth for free. They don’t (as of yet) have 3rd party ads giving them any revenue from users that don’t buy anything. More freeloading users doesn’t help IPO because they already IPO’d.
The idea that more freeloading users is a good thing is an absurd idea from the 2000 dotcom crash. I once had a potential customer call me and tried to negotiate for free web hosting under the premise that they would increase hits to my website. I laughed at them saying, “You don’t understand how any of this works. I have to buy servers for thousands of dollars. I have to pay tens of thousands a month for upstream bandwidth because I wasn’t a Tier 1 ISP. Driving traffic to my site costs me more money.”
A lot of valuation for these companies is not based on profitability, but rather on growth. So as long as you can show investors that you’re growing, they will buy in.
Also, what are the chances they don’t have a cheaper option of using GCP/AWD/Azure/etc?
Valuation is only useful for an exit strategy. They’ve already IPO’d. If they don’t show profit, the stock will collapse.
Counterpoint: Tesla before they made a profit
Tesla gave cars away for free to gain market share?
Their stock didn’t crater when they didn’t return a profit
They got money from the IPO. The money let them build a plant to sell cars at a profit. In 2016, they had burned through the IPO money and weren’t selling the model 3 yet. Musk later admitted they were months from bankruptcy. The stock price was around $12 a share.
Selling cars at a profit is what caused their stock price to rise.
Nitro makes plenty
I’m unfamiliar with their games. They have no ads? Or are you talking about Discord?
Discord - Nitro
And if no one bought Nitro or advertised games Discord would run out of money.
That’s the same as using Roblox without giving them any money.
This isnt speculation here, they do, and they make A LOT from nitro subscriptions and server boosts.