HUGE LOSSES BUT HIGH VALUATION, WHY AND HOW? Companies, particularly startups, are sometimes regarded as unicorns even while they are making losses. This may seem odd, but even some of the well-established firms are not valued as high as some startups, and in certain situations, these well-established companies are valued well below their true worth. Now the question arises, Why is this happening? Well valuing a loss-making company can be a seriously tricky affair. It is even more difficult to value a company with negative earnings than a company with positive earnings. There are many reasons behind this strange valuation like discounted cash flow, future expectations, and forward-looking projections. In cases where you see big hi-tech companies undertaking IPOs at eye-watering amounts, even though they aren't in profits, they are essentially creating a large pool of investment to take the company forward to achieving its next level. Investors go for this situation because they pe