Are you not aware that public companies split the profits too? They do not need to grow to have value for investors.
Comment on Reddit Falls Short of Ad Growth Targets Ahead of Likely 2024 IPO
chiliedogg@lemmy.world 10 months agoThe difference with Facebook is that it is a public company, so it does have to grow every year to have value for investors.
Reddit doesn’t. It’s existing private investors can splot the profit and be just fine. They just want a huge payout that will only come from an IPO.
wicked@programming.dev 10 months ago
Chessmasterrex@lemmy.world 10 months ago
Not all of them do that. There are growth stocks and dividend stocks. Growth stocks typically don’t pay dividends, but instead reinvest the dividend back into the company. Amazon, Alphabet and Berkshire Hathaway don’t pay dividends.
wicked@programming.dev 10 months ago
Of course not. But they can, whenever they choose to. Parent comment said they have to grow since they are public, unlike private companies like Reddit.
crsu@lemmy.world 10 months ago
Yeah tell it to the shareholders
SCB@lemmy.world 10 months ago
so it does have to grow every year to have value for investors
This gets said a lot but it is not true for a couple reasons.
1: With an IPO you’re not as dependent upon individual investors, and as your value grows - which often has nothing to do with your company’s performance, you obtain additional funding.
2: private or large-scale investors will literally have you sign contracts stating X% return on investment is what you owe them - once you surpass your return on investment, unless you seek additional funding, significant growth pressure is gone. Most companies immediately seek additional funding, which is how this gets interpreted as “requires perpetual growth.”
People usually only care about your growth as a function of how it correlates to a rise in your value. Most stock growth is entirely based on feels - it’s closer to social media than it is to any sort of accounting.
mechoman444@lemmy.world 10 months ago
And the issue with consistent growth in billion dollar companies is that it’s not sustainable. We can’t just keep pilling on profits on top of profits to sate investors insecurities.
RubberElectrons@lemmy.world 10 months ago
These morons will try though, their strategy invariably seems to be building the Jenga tower as high as possible, thinking they’ll be “quick” or “smart” enough to sell their shares before it tumbles.
It’s gambling, but with people’s livelihoods.
AutistoMephisto@lemmy.world 10 months ago
I can’t wait for all the news articles about the massive layoffs at Reddit, though it will be sad to see the massive droves of employees shuffling out the door with their personal effects like they did when the Enron scandal broke.
AutistoMephisto@lemmy.world 10 months ago
I can’t wait for all the news articles about the massive layoffs at Reddit, though it will be sad to see the massive droves of employees shuffling out the door with their personal effects like they did when the Enron scandal broke.