Loosing money and generating riches

Speculation is back. Even the Nasdaq has busted through its dot-com bubble high. Even red ink doesn’t scare off investors.

There are 12 stocks in the broad Russell 1000 index, including electric car maker Tesla Motors (TSLA), security firm FireEye (FEYE) and entertainment company DreamWorks Animation (DWA)that are up 20% or more over the past three months even though the companies have lost money over the past 12 months, according to a USA TODAY analysis of data from S&P Capital IQ.

These are the kinds of stocks that personify investors’ mixed feelings in the current market. The speculative fever of investors sees great promise in corporate stories that have yet to materialize in profit. Yet, the prudent side of investors knows the risks of such speculative plays — especially as stocks push higher.

If there’s good news, it’s that investors aren’t piling into money-losing companies full bore, yet. There are 114 companies in the Russell 1000 index that have posted net losses over the past 12 months. Shares of these companies are up 0.6% on average over the past three months. That’s better than the Russell 1000’s 0% gain during the same period, but not ridiculously so.

Still, there are some money-losers that are gaining fast. Tesla is the money-losing company to beat. The company posted a net loss of nearly $400 million over the past 12 months. But despite that loss — which is 400% bigger than the company’s loss in 2013 — the stock is up 34% over the past three months. And that’s just a continuation of a big rally this year as the shares are up 49% so far in 2015.


Being in the hot sector certainly helps. Given the rush in cyberhacking, companies that help firms lock down their computer networks have been golden. Many cybersecurity firms don’t make money — yet — but investors don’t seem to mind. Shares of FireEye and rival Palo Alto Networks are up 26% and 25% this year respectively as investors bet that demand for security is so strong, they’ll eventually benefit.