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It's psychology-fueled. Also, a lot of companies reinvest profit so they don't have to pay taxes.
by m1117 6y ago
It's psychology-fueled. Also, a lot of companies reinvest profit so they don't have to pay taxes.
- abfan1127 6y agois it fair to say that investors see more return through reinvestment rather than distributions? Reinvestment sees 100% of the capital, but distributions are at best 75%? Assumptions are that the reinvestment creates value fairly quickly and drives the stock price up.
- kgwgk 6y agoThe company could also distribute profits to investors repurchasing shares.
- bumby 6y ago>companies reinvest profit There central company to the article’s point (Snowflake) has no profit to reinvest
- polote 6y agoit does actually, when you reinvest profit you don't make any profit. They reinvest the money before it could become profit, mostly by hiring more sales
- bumby 6y agoIsn’t that exactly what the article is claiming they should do? Investing in sales and marketing now to drive future annuities isn’t the same strategy as reinvesting profits to dodge taxes as the OP claims
- kgwgk 6y agoDepends on what do you mean by "reinvest". If you have $1b in profits and build a $1bn factory you still have to pay almost the same taxes. If you increase payroll in the current year by $1bn you won't make a profit and you won't pay taxes... but it may not be as good an investment.
- HarryHirsch 6y agoDon't they use accounting tricks these days so they can keep their cash and then carry it to the stock market? This has the double advantage to keep the stock market inflated and compared to R&D where you risk product failure, the stock market is backstopped by the government and risk-free. That's why we don't have flying cars. Instead of investment in core competencies we invest in the market.
- deelowe 6y agoWe don't have flying cars because it's a silly concept.
- NikolaeVarius 6y agoWe have flying cars. They are called Helicopters.
- ConcernedCoder 6y agoHave you SEEN the way most people drive?
- InitialLastName 6y agoUgh flying cars would require a whole different level of infrastructure to protect pedestrians and property from idiots/malignants in vehicles. We already have giant cement blocks and metal poles everywhere, now we need human-permeable cages.
- ertemplin 6y agoYou should take an intro flight lesson at a flight school. There's no way the majority of people could safely fly a personal aircraft in all weather conditions. Flying cars will have to be 100% dependent on a really good autopilot which hasn't been developed yet (which I guess is sort of the point you're trying to make).