You do it the other way around and it takes decades, even generations to become a big business. The average growth in this sector is only 7%. So going after industry average margins prioritizing profits means settling for industry average growth. At 7% annually, it would take 11 years to double in size.
Some hypothetical scenarios for understanding...
Scenario 1: IQST could have focused on margins after say 2020 having done 45M revenue and 10 years later, 2030, at 7% growth they'd only be at 88.5M revenue. So the outlook would be by 2030 they do 89M revenue and at say 10% profit they have 9M profit. At a 30 P/E they'd have a 270M valuation.
Scenario 2: They stayed focused on growth. They're on track for 1B revenue around 2027. Shift focus towards margins and profit then, and settle for industry average growth of 7% and the company still grows from 1B in 2027 to 1.23B by 2030 and at 10% profit has 123M profit. A 30 P/E would be a valuation of 3.69 billion.
Scenario 1 shows profit faster, but 10 years later it's still a microcap company no one has ever heard of and is only growing 7% a year so no one will ever hear of them. They won't be a billion dollar company in our lifetime. It would literally take another 30 to 40 more years to reach 1 billion in revenue. While scenario 2 takes longer to show good profits, once they do the company is worth 14x more. Same 10 year window, same 10% profit margins in the end, but a 14x difference in the company's value.
Amazon, selling books online... Founded in 1994, became public company in 1997 and didn't turn profitable until 2003. 9 years operating at a loss focusing on growth.
Netflix, mailing DVD's to people's houses... Founded in 1998, public in 2002 still operating at a loss, first profitable year in 2003. 5 years operating at a loss focusing on growth.
Countless examples...
IQST holding company created in 2018, first full profitable year looks like it'll be 2024 for 6 years operating at a loss focused on growth. They're literally following the blueprint laid out by most of the younger fortune 500 companies that were founded within the last 30 years. It's high risk / high reward, but now that they're crossing into profitability with Q3, Q4, and now sounds like Q1 all profitable, the risk is significantly lower. They don't have to raise cash to fund operations now, they're self sustaining and still growing over 100% this year. That's insane. What's the risk of them going bankrupt now? What's their profit potential 3-5 years out? Where will they be in 10 years? I'll take 100%+ growth and only 1% profit this year, over 7% growth and 10% profit because I'm planning to be here long term and I can see where the company is headed. Not everyone can, not everyone wants to invest that long, and not everyone believes it'll work out for IQST. And that's fine to each their own. But that's the track the company appears to be on, and it's clearly been stated that's their plan. Focus on growth reinvesting profits until they're doing over a billion dollars a year.
Not financial advice, just my personal opinion for discussion purposes.
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