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Below is the income statement of a publicly-traded biotech company from 2004 until 2007: Year 2004...

Below is the income statement of a publicly-traded biotech company from 2004 until 2007:

Year

2004

2005

2006

2007

Revenue

$0

$0

$0

$0

Expenses

$0.2 million

$0.7 million

$2.2 million

$4.8 million

The company’s stock was trading for $2 in 2004 and is now trading for $7. Are investors irrational? Should the stock be sold short? Is it possible for a company in the biotech business to be worth something even though it has no current sales? What can justify the billion-dollar values of technology companies which have yet to earn any profits?

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jeff jeffy answered 11 months ago
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