Certain types of businesses are more challenging to value than others. Traditional value investing is done using Generally Accepted Accounting Principles, or "GAAP". Traditional methods allow you to look at earnings per share growth and make assumptions about the quality of the business. Non-GAAP accounting allows a way of looking at companies that are not yet profitable to see if they have the potential to become profitable in the future. You would attempt to value a non-GAAP company on it's ability to create cash flow, with the assumption that whatever capital expenditures they have would be eclipsed in the future by the amount of revenues being generated. Be very cautious with the non-GAAP method. I recently heard someone draw a comparison between GEICO, a division of Berkshire Hathaway (BRK.A) (BRK.B), and Amazon (AMZN). GEICO spends a good amount of cash up front to secure their customers, as much as $1500 per policy. That is on things like advertising and other operational expenses, but for each dollar they are spending in securing the customer, they are earning many times more than that in future returns. With GEICO, Warren Buffett might collect say, a $600 annual premium from a customer, so they start to make a profit in the 3rd year. Most customers do not constantly switch insurers, unless they are bad drivers, in which case GEICO wouldn't want to take the risk on them anyway. With the collected premiums, Buffett doesn't have to give that money to the customers right away unless they have an accident, so they can invest that money, or "float" it into things like common stocks. If the customer is accident free after 3 years, not only have they made a profit on the policy, they have additional value created from their stock investments. Compounded, that could be an easy 30-50% return on that cash alone. Amazon, on the other hand, their customers are not going to float money to them. If you're buying $600 worth of electronics, or some books or whatever the case may be, you want them right now. That means outlaying cash for inventory and storing those goods until the customer orders them. Virtual books are the one exception, but you still have to pay for servers to store those on, royalties to the author, etc. All of those costs are on assets that have to be refreshed when they depreciate. Technology gets old, distribution becomes less efficient as new tools emerge, etc. Moreover, those customers aren't going to be loyal. They'll buy from whoever has the best price right that moment. And since Amazon is constantly working to lower the costs of the things they are selling, they'll earn even smaller profits on those things in the future.