Why Positive Cashflow Matters
One sign of a bubble: traditional valuation principles are abandoned because "this time it's different". See Nifty Fifty, 2000 dotcom, 1920's crash, 2015 Chinese A shares, ... . It usually requires a new generation of people to enter the market because most people learn only on their own mistakes, not on other people mistakes.This article talks about what negative cash flow means for the company. But what does it mean for the investor? A company that cannot go cash flow positive is worth zero - the value of the company is max(all future cash flows discounted by the interest rate curve, 0). The max(, 0) comes from the concept of the limited liability company.