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Yes, but the stock market works on the premise of growth, they try to raise money by virtue of being on the stock market, in order get the money required to fin
by MichaelMoser123 5y ago
Yes, but the stock market works on the premise of growth, they try to raise money by virtue of being on the stock market, in order get the money required to finance that growth.
I would think, that a company that has plateaued should take itself off the stock market, however this doesn't seem to be happening. Such a move would probably imply some drastic changes in how a company is goverend.
- mixedbit 5y agoA company that does not grow can still share profits with the owners, so it makes sense also for not growing companies to stay on the stock market, so people can buy/sell these future profits.
- aeyes 5y agoTaking the company private means that you have to buy all outstanding shares. How are you going to come up with the money to do that? Valuation is usually around 20x earnings. If you do it through share buybacks, this process will take decades. Pretty much the only way to do it is with an outside investor and in that case the company still doesn't "own itself".
- asdfsd234234444 5y agoNot true at all. Look at Apple.
- BbzzbB 5y agoWhen you have plateaued post-hypergrowth is not the time to get off the market, it's time to redistribute capital by massively repurchasing shares if you can't intelligently reinvest it all. Preferably after the market slams your ticker.
- kriops 5y agoThis is not, and have never been, the case. Certain markets are winner-take-all, which necessitates a growth-oriented strategy regardless of the stock market. In the general case, the value of a stock only dips if the risk-adjusted net present value of expected future dividends changes for the worse. What happened here is that the market clearly expected the growth potential to be larger than what was the case, but absolutely not infinite.