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How to evaluate no-profit companies like SHOP and NOW?

Lately I’ve been looking at Barchart’s biggest momentum gains in the 1yr/3yr/5yr categories and seeing what looks interesting.

[https://finance.yahoo.com/quote/SHOP/financials?p=SHOP](https://finance.yahoo.com/quote/SHOP/financials?p=SHOP)

[https://finance.yahoo.com/quote/NOW/](https://finance.yahoo.com/quote/NOW/)

These two companies have had great performance price wise and relatively little downswing compared to what happened in the general market at the end of last year.

How exactly does one attempt to make a value judgement on these stocks?

I would imagine that at some point, the reality comes into play and the bull run on these prices ends as they approach the fair market value. Something like that happened to Square recently: [https://finance.yahoo.com/quote/SQ?p=SQ](https://finance.yahoo.com/quote/SQ?p=SQ)

It feels not unlike playing a ponzi scheme, knowing that it will fall out from under you at some point but hard to say when. That said, the trend of 50% YoY gains is potentially worth a gamble.

That said, I have no idea what regular investors are using to determine what the “fair value” stopping point would be, since the normal P/E and discounted cash flow type methods don’t really apply. Also, some kind of multiple on revenue or revenue growth rate measures doesn’t seem to be relevant since Square has comparable ones to SHOP and NOW but unlike those ones, it did find a top.

EDIT: to clarify, this is for mad money account. I’m following a momentum strategy for some picks like V recently, which had a very similar chart, but those had great earnings and growth behind the bull run.

How to evaluate no-profit companies like SHOP and NOW? – RobinHood – Reddit Feed


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