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Article raises a good question. IPO --> pressure from shareholders to increase short term profits --> raise prices to increase margins --> slower growth + cust
by davi 17y ago
Article raises a good question.
IPO --> pressure from shareholders to increase short term profits --> raise prices to increase margins --> slower growth + customers migrate to Amazon --> company plateaus, stock tanks (no longer a growth stock), but founders/early investors rich.
Any reason this is not going to happen?
- potatolicious 17y ago"slower growth + customers migrate to Amazon" Who is also a public company. You're trying to say that a public company will lose to another public company because it's public...
- davi 17y agoNo -- given equal profit margins, a small volume retailer will usually lose out to a large volume retailer, since the larger company can buy in bulk and sell at a lower price. Assuming that Amazon's volume is greater than Newegg's, if they operate with equal profit margins, Newegg will probably lose to Amazon. --- edit: though I see from your comment above that they have automated warehouses, etc. So maybe they can raise margins and still beat larger competitors on price. I buy from Newegg all the time; it will be interesting to watch over the next few years.
- CWuestefeld 17y agoWhy is it universally assumed that corporate shareholders are incapable of looking at a big picture? If there were such a systematic error in the market, then a smart investor could really make a killing by investing in the artificially-cheap stock of long-planning corporations. And, of course, such an investor would have a very impressive history after a while, and be able to command quite a bit of money managing investments for others... which of course leads to greater sums of money being invested more intelligently. The market fixes itself.