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The current state of the markets and private equity is deeply troubling. Gone are the days when companies like Microsoft went public at reasonable valuations, a
by gzer0 2y ago
The current state of the markets and private equity is deeply troubling. Gone are the days when companies like Microsoft went public at reasonable valuations, allowing everyday investors to participate in their massive growth. Now, companies like Uber and Airbnb debut on the stock market at sky-high valuations, leaving little room for the average investor to profit.
Worse still, the concentration of wealth has enabled large private equity firms to gobble up what were once thriving small businesses across various industries - from veterinary clinics to engineering firms. This trend stifles entrepreneurship and limits opportunities for employees to rise through the ranks and become owners themselves.
America has lost half its public companies since the 1990s. The count of publicly listed companies traded on US exchanges has fallen substantially from its peak in 1996. Back then, the number exceeded 8,000 companies. Today that count has dropped by more than 50% to just 3700 [1].
[1] https://www.cnn.com/2023/06/09/investing/premarket-stocks-trading/index.html https://www.cnn.com/2023/06/09/investing/premarket-stocks-tr...
- njovin 2y agoI would hope that this results in a reduction of companies seeking to go public in the first place. We've seen many cycles of: innovation -> growth -> IPO -> happy customers + employees -> not enough growth -> PE -> layoffs -> product/user decline. The demand for ever-increasing a growth demanded by the markets is not sustainable for a majority of businesses. IMO the employees, customers, and general public would benefit from companies growing to a healthy size and then maintaining that plateau. SquareSpace has ~44% of the self-hosted website market. Shouldn't that be enough?
- JumpCrisscross 2y ago> SquareSpace has ~44% of the self-hosted website market. Shouldn't that be enough? They’re making hundreds of thousands of dollars of profit on hundreds of millions of dollars of gross profit [1]. Most of the cost is marketing & sales. Private equity is actually about focussing less on growth and more on sustainability; the logic of this acquisition is that 44% is enough. [1] https://d18rn0p25nwr6d.cloudfront.net/CIK-0001496963/d08174f7-541b-45e6-989e-ac8bd043eae5.pdf https://d18rn0p25nwr6d.cloudfront.net/CIK-0001496963/d08174f...
- CapcomGo 2y agoIsn't PE really focused on getting their fees?
- JumpCrisscross 2y ago> Isn't PE really focused on getting their fees? Sure? Most people are motivated by compensation.
- deleted 2y ago[deleted]
- MyFirstSass 2y ago[flagged]
- bcrosby95 2y agoI think the argument is that companies take longer to go public because of increased regulations due to the whole Enron thing.
- dang 2y agoPlease don't take HN threads into generic ideological tangents (they're repetitive), and especially please don't post in the flamewar style. It's not what this site is for, and destroys what it is for. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- tryptophan 2y agoClassic case of overregulation killing things. Stock markets were originally invented to fund very risky new ventures in the Netherlands. Now you need to spend millions on lawyers and various forms before being allowed to list, after which the regulatory nonsense only spirals upwards to more and more. There is no reason that random mom and pop shops shouldnt be able to list their sandwitch shop and raise 50k to remodel. Will there be tons of scams and nonsense? Yes. Dont invest in tiny companies with no track record then, easy solution. Will productive stuff also happen? Also yes. People can already waste their money gambling/smoking/lotteries/drugs/stock options/supid luxury goods - all of which have a guaranteed chance of working out poorly for society, but this is apparently ok and we instead need to protect people from the stock market.