That's the nature of investing in stocks. If you want something guaranteed, open a savings account.

Welcome to VC. But seriously, that's the stock market for you. Gambling with lots and lots of rules.

It's also dangerous to assume that all companies must be profitable from day one. Facebook is a good example of a company that was "losing money" but was able to turn profits recently.

Which is not to say that I believe twitter deserves the market cap currently implied by the share price.

It is dangerous, that's the whole point. Investors are expecting high returns - this is not exactly a slow-growth stock, and they've taken a commensurately high risk in exchange.