One way to pump your stock is to claim profits when the only path to those profits is to issue
more stock.
Ears, This thread has gone long enough, but I had to answer this. Didn’t you read the initial post on this thread? Issuing more stock is NEVER a path to claiming profits! Not under GAAP! Not under non-GAAP or adjusted! Issuing more stock doesn’t let you claim profits! Period! Never! Under no circumstances!
That’s not just my opinion. That’s reality. Here’s what I wrote originally to start this thread. I’ll repeat it for you, since you missed it (with a tiny bit of editing for clarification):
How can people have no idea of what the difference between GAAP and non-GAAP is all about?
Do these people actually believe that the company really had a cash loss, and then gave away stock grants, and magically that allowed them to show a profit??? How! What nonsense!
If a company has a non-GAAP profit but a GAAP loss, what that means in the real world, is that the company made a cash profit, put the cash in the bank, real cash, REAL MONEY, real cash!
Then GAAP comes along and says, “Well, but you paid stock based compensation. Yes, we know that that is accounted for in stock dilution and an increased stock count (which reduces earnings per share), but we, in our wisdom, decided to double-count it and make believe it was a cash expense, and that therefore you didn’t make that profit. Yes, we know the cash is in your account, but we decided to punish you for being bad boys by making believe it isn’t there and you never made that cash.”
But yes, they made a cash profit, and the cash is in the bank!
Now, let me assure you, I don’t like companies who dilute my stock hugely each year, and some I avoid them because of it, but I’m aware that these rapidly growing young tech companies don’t have a lot of cash and can’t afford to pay large salaries, and the way they get bright young tech people to sign on is to give them a stake in the company. That’s life.
Saul