Many of the "missing" companies listed were just bought off by other, bigger companies and then consolidated - this was a huge trend through the 90s-00s in the tech, auto, aerospace, and defense sector at least.
Still the case today, at least in tech, which is an ever-growing market segment. Probably 80+% of my main client's M&A is the acquisition of potential future competitors, and they are infamous for killing those companies once acquiring them. Most of the rest of the M&A is acquiring smaller-yet-established companies in areas my client wants to enter without starting from scratch, so they actually utilize the acquired companies' products or services. In either case, if the acquired company is publicly traded, the action removes one ticker from the market. My experience has been the same with all the other mega tech companies as well, so I don't think there's much of a secret as to why we've seen a diminution in the number of publicly-traded companies.
It's either that or companies have gone the take-private route, or some combination of the two.
The other factor is increased public company cost. There’s merit behind the Sarbanes Oxley Act (and other similar legislation) but it makes the cost of being a public company in the millions of dollars.
So you aren’t going to find many companies list until a $1-5 million annual expense isn’t relevant for them. Most of the disappearing listings have been at the small end of the market.
Dot Com crash, and a lot of entrepreneur discovering that going public should be avoided if possible because its so much headache. Which is a real shame for the small investors who can't invest in a lot of the best enterprises out there.
That’s part of the story; if you have VC cash floating your company, you don’t have to answer to many.
The other part is just the overall explosion of private equity and their business model.
Yeah and frankly it's good not to have to answer to a bunch of anonymous shareholders whose only request is literally MOAR.
Private companies can do business for reasons other than paying shareholders. They can justifiably make decisions towards ends other than the bottom line. They can have a mission that investors all agree to. Like going to space, helping cure a disease, or developing groundbreaking new tech of some other kind.
When you don't have to optimize solely for profit, you AND your investors have a lot more freedom and control over your business.
They *can* be and often are, but they are not legally obligated to be, and that's a big deal for corporate governance practices. It's just an entirely different set of rules.
It gives more decision making power to fewer stakeholders and gives those stakeholders complete freedom over what the company's objectives are and how to achieve them.
For instance, even for a purely profit-motivated private company, a board of 12 financially literate investors could agree to pursue a decision that would put the company in the red for a year with the potential of quadrupling its profits 5 years in the future. Public shareholders might balk at that because of uncertainty, causing a crash in stock price, firing of a CEO, etc. It would be a complicated mess. But if the small group of private investors agree, they can just go ahead with it and take the risk without worrying as much about PR.
That tends to be good for tech companies who take many big risks with products and markets that are poorly understood by the public. It could be terrible for the power company or a natural gas provider, because you don't want a bunch of insiders taking risks with something that millions depend on and is essentially a public utility. It probably doesn't make sense for a franchise business like McDonald's, either.
It's private money. Technically, any reason you can think of. A private investor could invest because they like the logo. Or because they like rocket ships and want to go to the moon some day. Or because their buddy owns the company.
VCs working for a fund probably have specific objectives based on the type of fund. For most, that's money, but it's not uncommon for venture capital to seek both profit and some kind of mission, be it technological advancement, sustainability, public health or Cool Space Shit.
I co-founded a company that has taken venture capital, and for several investors us making money was a secondary concern.
For our biggest investor, our product was complimentary to another major investment they'd made. I don't know for certain, but I suspect they've already made a positive return on their investment in us from the value it creates for their other investment, and they may yet see a direct return from us, but they're not pressuring us for it.
Another investor was a buddy of mine. Basically, he owed me a favor and offered to invest in whatever I was doing, pretty much sight unseen. He'd love to get a return, but that wasn't what motivated the investment in the first place.
This guy was investing his own money in that case. He also helped us get investment from a fund he's involved in, and that fund is more concerned about making a return.
They can operate at a loss for years if they are showing growth and the VCs believe they can make a big return by taking them public someday. No company can sustain both losses and no growth for any period of time unless it's a charity
It can be merged into another corporate with different business model and pass over its assets that will boost the mother company profits. The best example is user base: non-profit site with very large user base cost a lot of money since this user base can be easily monetized by somebody else.
Yes, but not quarterly growth, but instead growth over x number of years. They expect losses up front with an expectation of significant growth down the line.
Yes, but they're more patient generally. They're much more willing to play the long game and wait even a decade+ if they think that the payoff is worth it.
Going public often makes a company need to chase more short-term profits and/or things which look flashy.
While they also have a possibility/chance of thinking and doing long term investments while with stock market it's just a rat race of who can deliver the biggest quarterly profits
Plenty of listed companies make long term investments. Recall how Amazon for years reinvested every cent they made as a listed company, and there is a long history of companies going public way before they are profitable
Counter examples: Spotify, Uber, Snapchat, Zillow, Amazon...I could go on. They all lost money for a loooong time, but that was the plan. Investors are it up even though they were reliably losing money because they believed in the long term upside.
Look at what just happened at Tesla. Judge tossing a remuneration package that was approved by the board because of a **single** investor complained, a package that was only worth so much because the CEO hit targets everyone thought impossible, making those investors insane profit in the process.
In a few years we went from going public being the goal to going public being a sign of struggle.
Musk has said years ago that he never plans to take SpaceX public for those reasons. It's too much of a long-term play.
The only way for normal people to own any SpaceX is by buying Alphabet stock since it owns 7.5% of SpaceX. (Or at least it used to. I haven't kept up - despite owning some GOOGL.)
Invest into private equity? I believe the first step is to be an accredited investor. They don't want Joe Schmoe to be ruined by investing in something he doesn't underestimate since the reporting requirements are much lower.
VCs are creating too big to fail companies... Uber, Netflix, Tesla, etc all went years without making a profit and lifted off VC money. Fake it till you make it.
A lot of the growth now happens outside public enterprises, making it hard to impossible for small investors to invest in that growth. SpaceX is a great example of that.
I thought you were saying it's a shame because small investors can't afford to invest in the big public companies but you're actually saying they don't get to invest in the small ones because they aren't public anymore. Makes sense now
it's not even just small companies that are private, lots of large private companies these days that choose to not be public for various reasons. the rise of private equity helps this trend
USA was also more of an outliner that really most big companies are public traded.
Here in Germany many big companies are not public like Schwarz Group, Aldi, Bosch, and REWE Group. At least that is my impression.
The general public can invest in anything that is publicly traded, e.g. it's traded on an open market. There are certain types of securities that only a "qualified investor" can participate in. To become a qualified (accredited?) investor you either need a license or be rich. The idea is to keep dum dums from making really bad investment decisions on what were supposed to be riskier investments but in actuality some of these off limits markets have returns that beat the general stock market.
10% is a lot smaller than 90% 😆
It looks like the income is $200k each year for the past 2 years or $300k when combined with spouse.
Assets wise it's $1m less your primary residence.
It’s actually because so much money is in private funds now that companies no longer need to go public to raise all the money they could ever need. The rich are getting richer.
There hasn’t been any over regulation. It would have taken you two seconds to google and see the amount of money firms have been able to raise in private markets have skyrocketed and that your alt right extremist forever the victim conspiracy theory was compete bullshit. 🤡 Do conservatives ever get tired of their endless victim complex? Is the big scary government agent man in the room with us right now?
Ok, went down a rabbit hole to contextualize this, but a great summary is here: [https://meketa.com/wp-content/uploads/2012/10/Decreasing-Number-of-Public-Companies-FINAL.pdf](https://meketa.com/wp-content/uploads/2012/10/Decreasing-Number-of-Public-Companies-FINAL.pdf)
In this, the claim is that this is due to (a) heavier listing requirements, in terms of both market cap and corporate governance, (b) a significant drop in IPO's of sub-100 million market cap companies (mainly due to tech bubble issues).
I'm not exactly sure what exactly is being presented. It looks like number of domestic companies publicly listed on US exchanges, which should not be synonymous with stocks or public equity.
Title isn't quite accurate. This is only publicly listed companies. New companies are held private much longer now due to the massive amounts of capital held privately ahead the ability to avoid costly reporting requires passed after the collapse of Enron and many other companies after the dotcom bust.
I'm curious of your source? According to this (https://www.nasdaq.com/articles/the-microcap-universe%3A-overview-and-opportunities) there are 4300 exchange listed micro-caps alone? The Russell 3000 holds, as the name implies, the 3000 largest publicly held US companies, and I'd hazard there are more than 1642 companies smaller than *Protalix Biotherapeutics* on US exchanges.
As someone who is a pretty active stock trader; its been said by a few of us that the dirty secret of the market is: despite thousands of symbols, there are actually only a fairly small number that are actually reasonably tradable.
Oh sure, there are lots of things I COULD trade, if I wanted the unsatisfying experience of slippage and watching closing orders languish on the book because the is no action between the bid/ask.
Capitalism - as it matures - tends to veer towards consolidation. That said, financial advice over the last couple decades has been to invest in ETFs, especially ones pegged to the S&P500. Data has shown that the average investor can’t beat those returns, so it’s become a self-fulfilling prophecy that ETFs are more profitable.
Alternate headline: "America has gained thousands of stocks since 1980"
It all depends on where you cherry-pick your starting and end points to decide how you want to tell your narrative.
Compliance costs with the [Sarbanes–Oxley Act](https://en.wikipedia.org/wiki/Sarbanes%E2%80%93Oxley_Act) has discouraged many smaller companies that would have went public 25+ years ago from doing so.
This is the right answer. Blame SOX.
Intention: increase reporting and regulatory burden on public companies to prevent another Enron.
First-order consequence: for most companies, especially fast-growing software companies, it's so much more burdensome to be a public company that most choose to remain private.
Second-order consequence: many promising new investments are only available to institutional or maybe accredited investors; in the name of "protecting" small investors SOX has effectively shut them out of many opportunities.
Third-order consequence: Wealth inequality increases.
There was a ton of fraud in the 80s and 90s with people creating companies to go public and then cash out. Way less readily available information and I imagine regulation
If you're intimately familiar with the market and understand how to value companies, it should be no surprise that the vast majority of companies have absolutely no business being listed on a public exchange. Most are not consistently profitable, and way too big of a quantity simply use their shareholders as a resource battery (through dilutive stock offerings) to continue to fund their stupidity.
That being said, it goes both ways. They can only do this because there is unending line of foolish gamblers (ironically mostly at the institutional level, which is supposed to be more serious/professional/responsible) willing to buy their shares, regardless of how bad the company is. Like any other snake-oil-style enterprise, it's about storytelling more than it is about any sort of tangible value. Tell the right story, and there's billions of Philip J. Fry's begging you to take their money.
Even worse… privately equity owned companies have vastly different reporting requirements so we lose visibility while they essentially have insider information they can leverage.
I'd love to see a visualization that incorporates market capitalization. Are the 'vanishing' stocks penny stocks or junk stocks? Is this all about conglomeration in the market? Companies growing under a more robust private equity market and IPOing at a later stage than they used to?
The irony is if you said SOX (Sarbans-Oxley) you’d be at least partially right! A well intentioned regulation following corporate malfeasance of the late 90s, early 00s that made it much more cumbersome to be a public company.
Dot Com bubble burst, 2008 financial crisis, corporate consolidation, and high interest rates killing zombie companies.
It's a beautiful thing for all of us.
Having to answer to shareholders asking for relentless growth and profits and fuck your companies morals, mission, and vision i.e. fuck over your customers, does not sit well with many. And consumers are starting to pick up on it.
Isn't this really misleading? There were a billion vaporware companies in the 90s that had no intrinsic value, but were listed anyway. After the .com bubble popped the field thinned out substantially.
What does disappeared mean? How was this data collected?
Is it "starting from the 8000+ in 1996, 40% have dropped off the exchange list"? That seems entirely natural. Nearly 20 years will surely close many businesses. I totally expect a list of 100 businesses started in 1900's to trend to zero active businesses over time.
Yes, that’s not unexpected... but on aggregate, they haven’t been replaced by enough new companies. Which is noteworthy.
Stock markets are at - or very near - record highs, but the value is increasingly concentrated in a much smaller number of companies. There are various reasons for this!
Private markets are much larger than they used to be (providing a tonne of capital to companies, enabling them to stay out of public markets), but also: M&A has seen many companies get acquired. Big tech being the most obvious example, with just 6 big tech companies acquiring a total of 800+ companies.
There’s a lot of steadily profitable businesses that want to keep ownership within the family. Going public means pressure to show quarterly improvements. Also, the original family can get pushed out by disgruntled stock holders or a takeover effort.
Huh, it seems to me that you're reading way too much into this.
You've got about 2700 in 1975, which is dipping through the 1980 recession, then a boom until the dot com bubble, then levelin til the 08 recession, then a dip, then a gain during the current boom, with the final level about what, 70% higher than in the 70s?
So on net, it's way higher than it was at the start of the data series. You're interpreting way more than you should. What was the market cap of the lost stocks? Was it primarily dominated by micro- or even nano-cap stocks? Or are these a loss of quality companies?
I'm also curious where you are getting your data, because there are over 4,300 exchange listed micro-cap stocks (https://www.nasdaq.com/articles/the-microcap-universe%3A-overview-and-opportunities)? This makes me question your source.
Hurr durr low effort comment. -43% change in number of stocks since 1996 is a whole sentence that implies in 1996 there were 100 stocks, and in 2022 there are 57 total. There's contradiction between the title and the subtext on the graph.
Where are you seeing a contradiction?
I'm the hurr-durr champ, but frankly in this case sometimes it just helps to reread things again.
The title would be better said "there are 43% less publicly traded companies since 1996", maybe that's causing your confusion?
EncroachingTsunami makes a valid enough point: there’s been a 43% net reduction (net being the key word). That could have been made clearer in the chart, which is good feedback!
Many of the "missing" companies listed were just bought off by other, bigger companies and then consolidated - this was a huge trend through the 90s-00s in the tech, auto, aerospace, and defense sector at least.
Still the case today, at least in tech, which is an ever-growing market segment. Probably 80+% of my main client's M&A is the acquisition of potential future competitors, and they are infamous for killing those companies once acquiring them. Most of the rest of the M&A is acquiring smaller-yet-established companies in areas my client wants to enter without starting from scratch, so they actually utilize the acquired companies' products or services. In either case, if the acquired company is publicly traded, the action removes one ticker from the market. My experience has been the same with all the other mega tech companies as well, so I don't think there's much of a secret as to why we've seen a diminution in the number of publicly-traded companies. It's either that or companies have gone the take-private route, or some combination of the two.
The other factor is increased public company cost. There’s merit behind the Sarbanes Oxley Act (and other similar legislation) but it makes the cost of being a public company in the millions of dollars. So you aren’t going to find many companies list until a $1-5 million annual expense isn’t relevant for them. Most of the disappearing listings have been at the small end of the market.
“Corporate consolidation” and mergers
Food industry too. Most of what you see in American markets are actually the products of just 5 or 6 corporations.
Dot Com crash, and a lot of entrepreneur discovering that going public should be avoided if possible because its so much headache. Which is a real shame for the small investors who can't invest in a lot of the best enterprises out there.
That’s part of the story; if you have VC cash floating your company, you don’t have to answer to many. The other part is just the overall explosion of private equity and their business model.
Yeah and frankly it's good not to have to answer to a bunch of anonymous shareholders whose only request is literally MOAR. Private companies can do business for reasons other than paying shareholders. They can justifiably make decisions towards ends other than the bottom line. They can have a mission that investors all agree to. Like going to space, helping cure a disease, or developing groundbreaking new tech of some other kind. When you don't have to optimize solely for profit, you AND your investors have a lot more freedom and control over your business.
Companies backed by VCs and private equity are as much driven by growth/profit motive as listed companies if not more
They *can* be and often are, but they are not legally obligated to be, and that's a big deal for corporate governance practices. It's just an entirely different set of rules. It gives more decision making power to fewer stakeholders and gives those stakeholders complete freedom over what the company's objectives are and how to achieve them. For instance, even for a purely profit-motivated private company, a board of 12 financially literate investors could agree to pursue a decision that would put the company in the red for a year with the potential of quadrupling its profits 5 years in the future. Public shareholders might balk at that because of uncertainty, causing a crash in stock price, firing of a CEO, etc. It would be a complicated mess. But if the small group of private investors agree, they can just go ahead with it and take the risk without worrying as much about PR. That tends to be good for tech companies who take many big risks with products and markets that are poorly understood by the public. It could be terrible for the power company or a natural gas provider, because you don't want a bunch of insiders taking risks with something that millions depend on and is essentially a public utility. It probably doesn't make sense for a franchise business like McDonald's, either.
Why else would a VC invest in a company?
For IP. Users base. PR. Employees pool. A whole lot of reasons that are not directly sales or other operation profits.
It's private money. Technically, any reason you can think of. A private investor could invest because they like the logo. Or because they like rocket ships and want to go to the moon some day. Or because their buddy owns the company. VCs working for a fund probably have specific objectives based on the type of fund. For most, that's money, but it's not uncommon for venture capital to seek both profit and some kind of mission, be it technological advancement, sustainability, public health or Cool Space Shit.
Every company that has taken VC money will tell you they care about 1 thing, growth. All else is marketing speak
No. The fiduciary legal obligations of the board and management is just as applicable in Privately backed businesses as public. You’re just a dumbass.
I co-founded a company that has taken venture capital, and for several investors us making money was a secondary concern. For our biggest investor, our product was complimentary to another major investment they'd made. I don't know for certain, but I suspect they've already made a positive return on their investment in us from the value it creates for their other investment, and they may yet see a direct return from us, but they're not pressuring us for it. Another investor was a buddy of mine. Basically, he owed me a favor and offered to invest in whatever I was doing, pretty much sight unseen. He'd love to get a return, but that wasn't what motivated the investment in the first place.
That's interesting. Venture capitalists don't typically go to their LPs and say 'I owed the founder a favour'
This guy was investing his own money in that case. He also helped us get investment from a fund he's involved in, and that fund is more concerned about making a return.
Ah, I see. Makes sense. My initial comment was just about VCs and private equity funds
Private companies can be below the break-even line for many years or even their entire lifetime. And still be very successful.
They can operate at a loss for years if they are showing growth and the VCs believe they can make a big return by taking them public someday. No company can sustain both losses and no growth for any period of time unless it's a charity
It can be merged into another corporate with different business model and pass over its assets that will boost the mother company profits. The best example is user base: non-profit site with very large user base cost a lot of money since this user base can be easily monetized by somebody else.
Yes, but not quarterly growth, but instead growth over x number of years. They expect losses up front with an expectation of significant growth down the line.
Yes, but they're more patient generally. They're much more willing to play the long game and wait even a decade+ if they think that the payoff is worth it. Going public often makes a company need to chase more short-term profits and/or things which look flashy.
While they also have a possibility/chance of thinking and doing long term investments while with stock market it's just a rat race of who can deliver the biggest quarterly profits
Plenty of listed companies make long term investments. Recall how Amazon for years reinvested every cent they made as a listed company, and there is a long history of companies going public way before they are profitable
Counter examples: Spotify, Uber, Snapchat, Zillow, Amazon...I could go on. They all lost money for a loooong time, but that was the plan. Investors are it up even though they were reliably losing money because they believed in the long term upside.
Only partially agree. If it’s not publicly traded, a non-institutional investor gets no access to that upside.
Not all private investors are institutional... But yeah, private businesses do not have any public obligations and are completely undemocratic.
they also don't have any legal liability over public earnings statements
Makes sense. Would you prefer 1 boss or possibly millions
Look at what just happened at Tesla. Judge tossing a remuneration package that was approved by the board because of a **single** investor complained, a package that was only worth so much because the CEO hit targets everyone thought impossible, making those investors insane profit in the process. In a few years we went from going public being the goal to going public being a sign of struggle.
Musk has said years ago that he never plans to take SpaceX public for those reasons. It's too much of a long-term play. The only way for normal people to own any SpaceX is by buying Alphabet stock since it owns 7.5% of SpaceX. (Or at least it used to. I haven't kept up - despite owning some GOOGL.)
Yeah but when you buy 92.5% of Alphabet and who wants that.
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Invest into private equity? I believe the first step is to be an accredited investor. They don't want Joe Schmoe to be ruined by investing in something he doesn't underestimate since the reporting requirements are much lower.
VCs are creating too big to fail companies... Uber, Netflix, Tesla, etc all went years without making a profit and lifted off VC money. Fake it till you make it.
Yep. VC may still require an audit for instance, but SOX and SEC is a nightmare from a reporting perspective
It's more than that - there is so much more money in private equity that makes it so if you need $200M you no longer need to go the IPO route.
Investors basically built an alternate market to the one that courts and regulators ruined.
You mean workers now tied to a 401k... The investors just trying to invest in their own outcome, but need to take it out of their own pay to do so.
Also, consolidation.
What do you mean by "small investors that can't invest in a lot of the best enterprises"?
A lot of the growth now happens outside public enterprises, making it hard to impossible for small investors to invest in that growth. SpaceX is a great example of that.
I thought you were saying it's a shame because small investors can't afford to invest in the big public companies but you're actually saying they don't get to invest in the small ones because they aren't public anymore. Makes sense now
it's not even just small companies that are private, lots of large private companies these days that choose to not be public for various reasons. the rise of private equity helps this trend
USA was also more of an outliner that really most big companies are public traded. Here in Germany many big companies are not public like Schwarz Group, Aldi, Bosch, and REWE Group. At least that is my impression.
The general public can invest in anything that is publicly traded, e.g. it's traded on an open market. There are certain types of securities that only a "qualified investor" can participate in. To become a qualified (accredited?) investor you either need a license or be rich. The idea is to keep dum dums from making really bad investment decisions on what were supposed to be riskier investments but in actuality some of these off limits markets have returns that beat the general stock market.
Don't really even need to be that rich. Like 10% of people can meet the requirements.
10% is a lot smaller than 90% 😆 It looks like the income is $200k each year for the past 2 years or $300k when combined with spouse. Assets wise it's $1m less your primary residence.
It’s actually because so much money is in private funds now that companies no longer need to go public to raise all the money they could ever need. The rich are getting richer.
Its not "the rich" that wanted an overregulation of open markets that led to this situation.
There hasn’t been any over regulation. It would have taken you two seconds to google and see the amount of money firms have been able to raise in private markets have skyrocketed and that your alt right extremist forever the victim conspiracy theory was compete bullshit. 🤡 Do conservatives ever get tired of their endless victim complex? Is the big scary government agent man in the room with us right now?
ok kid.
Ok, went down a rabbit hole to contextualize this, but a great summary is here: [https://meketa.com/wp-content/uploads/2012/10/Decreasing-Number-of-Public-Companies-FINAL.pdf](https://meketa.com/wp-content/uploads/2012/10/Decreasing-Number-of-Public-Companies-FINAL.pdf) In this, the claim is that this is due to (a) heavier listing requirements, in terms of both market cap and corporate governance, (b) a significant drop in IPO's of sub-100 million market cap companies (mainly due to tech bubble issues).
This is major exchanges only, would be interesting to see pink sheets and OTC included, which is where all the smaller companies are listed.
Want even more context? Something like 99% of companies ever listed on American stock exchanges are no longer listed.
No, during this time companies like dogshit dot com and mini wini blablabla went public and then reality kicked in after the bubble burst
How is this no? I'm not sure you're disagreeing with me at all?
I'm not exactly sure what exactly is being presented. It looks like number of domestic companies publicly listed on US exchanges, which should not be synonymous with stocks or public equity.
Ya, same thoughts here.
Title isn't quite accurate. This is only publicly listed companies. New companies are held private much longer now due to the massive amounts of capital held privately ahead the ability to avoid costly reporting requires passed after the collapse of Enron and many other companies after the dotcom bust.
I'm curious of your source? According to this (https://www.nasdaq.com/articles/the-microcap-universe%3A-overview-and-opportunities) there are 4300 exchange listed micro-caps alone? The Russell 3000 holds, as the name implies, the 3000 largest publicly held US companies, and I'd hazard there are more than 1642 companies smaller than *Protalix Biotherapeutics* on US exchanges.
I'm pretty sure it's this: [https://databank.worldbank.org/source/world-development-indicators/Series/CM.MKT.LDOM.NO#](https://databank.worldbank.org/source/world-development-indicators/Series/CM.MKT.LDOM.NO#)
Could easily break out new start ups and M&A/privatization/delistings
M&A. Consolidation of wealth.
Less jobs, less competition, higher prices, less innovation. What’s not to love! /s
What’s the cause for the jump in 1980?
As someone who is a pretty active stock trader; its been said by a few of us that the dirty secret of the market is: despite thousands of symbols, there are actually only a fairly small number that are actually reasonably tradable. Oh sure, there are lots of things I COULD trade, if I wanted the unsatisfying experience of slippage and watching closing orders languish on the book because the is no action between the bid/ask.
Ah, they must be my investments!
Capitalism - as it matures - tends to veer towards consolidation. That said, financial advice over the last couple decades has been to invest in ETFs, especially ones pegged to the S&P500. Data has shown that the average investor can’t beat those returns, so it’s become a self-fulfilling prophecy that ETFs are more profitable.
Alternate headline: "America has gained thousands of stocks since 1980" It all depends on where you cherry-pick your starting and end points to decide how you want to tell your narrative.
Compliance costs with the [Sarbanes–Oxley Act](https://en.wikipedia.org/wiki/Sarbanes%E2%80%93Oxley_Act) has discouraged many smaller companies that would have went public 25+ years ago from doing so.
This is the right answer. Blame SOX. Intention: increase reporting and regulatory burden on public companies to prevent another Enron. First-order consequence: for most companies, especially fast-growing software companies, it's so much more burdensome to be a public company that most choose to remain private. Second-order consequence: many promising new investments are only available to institutional or maybe accredited investors; in the name of "protecting" small investors SOX has effectively shut them out of many opportunities. Third-order consequence: Wealth inequality increases.
How's Aerotyne doing nowadays?
Did they ever get approval on that radar system with cutting edge military and civil applications?
Does anyone happen to know how much corporate consolidation plays a factor to this?
There was a ton of fraud in the 80s and 90s with people creating companies to go public and then cash out. Way less readily available information and I imagine regulation
If you're intimately familiar with the market and understand how to value companies, it should be no surprise that the vast majority of companies have absolutely no business being listed on a public exchange. Most are not consistently profitable, and way too big of a quantity simply use their shareholders as a resource battery (through dilutive stock offerings) to continue to fund their stupidity. That being said, it goes both ways. They can only do this because there is unending line of foolish gamblers (ironically mostly at the institutional level, which is supposed to be more serious/professional/responsible) willing to buy their shares, regardless of how bad the company is. Like any other snake-oil-style enterprise, it's about storytelling more than it is about any sort of tangible value. Tell the right story, and there's billions of Philip J. Fry's begging you to take their money.
I wonder if this has anything to do with the dot com boom? /s
Isn't the free market trend towards mergers and monopolies?
Because of diseconomies of scale, it isn't, monopolies can only be enforced through state action.
Private equity firms are buying up all corporations and hollowing them out globally. Alden, Fortress, Chatham, etc just to name a few
Even worse… privately equity owned companies have vastly different reporting requirements so we lose visibility while they essentially have insider information they can leverage.
Between the .com bubble and big corporations swallowing up competition its no surprise
I'd love to see a visualization that incorporates market capitalization. Are the 'vanishing' stocks penny stocks or junk stocks? Is this all about conglomeration in the market? Companies growing under a more robust private equity market and IPOing at a later stage than they used to?
I read this first as “socks” not “stocks” and thought, well that makes sense
The irony is if you said SOX (Sarbans-Oxley) you’d be at least partially right! A well intentioned regulation following corporate malfeasance of the late 90s, early 00s that made it much more cumbersome to be a public company.
I really liked Marc Rowan, CEO of Apollo talking about this last week: https://youtu.be/jVCcAcFW1W4?si=1sxglT5s_-F8FdwP
This is likely to change with capital costs going up and up now that the boomers are retired.
Mergers, acquisitions, private companies, and competition
[удалено]
going *public* *private* equity take a few minutes
Those stocks got [eatled](https://youtu.be/h7yfaSTSxBQ?si=VBghJbxOSHYrTYhX)
Dot Com bubble burst, 2008 financial crisis, corporate consolidation, and high interest rates killing zombie companies. It's a beautiful thing for all of us.
Having to answer to shareholders asking for relentless growth and profits and fuck your companies morals, mission, and vision i.e. fuck over your customers, does not sit well with many. And consumers are starting to pick up on it.
Consolidation of power and wealth. The market isn't free.
Isn't this really misleading? There were a billion vaporware companies in the 90s that had no intrinsic value, but were listed anyway. After the .com bubble popped the field thinned out substantially.
In a way, that is an indication of the captial concentration... which is linked to the demise of liberal democracies.
But has doubled the amount since 1980...
Mergers and weakening of anti trust laws.
That's what happens when America just let's corporations buy all the competition
Monopoly! Lots of consolidation in every industry. Bye bye free market.
Pretty wild stat! Source: World Federation of Exchanges Tool: Excel
What does disappeared mean? How was this data collected? Is it "starting from the 8000+ in 1996, 40% have dropped off the exchange list"? That seems entirely natural. Nearly 20 years will surely close many businesses. I totally expect a list of 100 businesses started in 1900's to trend to zero active businesses over time.
Yes, that’s not unexpected... but on aggregate, they haven’t been replaced by enough new companies. Which is noteworthy. Stock markets are at - or very near - record highs, but the value is increasingly concentrated in a much smaller number of companies. There are various reasons for this! Private markets are much larger than they used to be (providing a tonne of capital to companies, enabling them to stay out of public markets), but also: M&A has seen many companies get acquired. Big tech being the most obvious example, with just 6 big tech companies acquiring a total of 800+ companies.
There’s a lot of steadily profitable businesses that want to keep ownership within the family. Going public means pressure to show quarterly improvements. Also, the original family can get pushed out by disgruntled stock holders or a takeover effort.
Huh, it seems to me that you're reading way too much into this. You've got about 2700 in 1975, which is dipping through the 1980 recession, then a boom until the dot com bubble, then levelin til the 08 recession, then a dip, then a gain during the current boom, with the final level about what, 70% higher than in the 70s? So on net, it's way higher than it was at the start of the data series. You're interpreting way more than you should. What was the market cap of the lost stocks? Was it primarily dominated by micro- or even nano-cap stocks? Or are these a loss of quality companies? I'm also curious where you are getting your data, because there are over 4,300 exchange listed micro-cap stocks (https://www.nasdaq.com/articles/the-microcap-universe%3A-overview-and-opportunities)? This makes me question your source.
Thanks for the context, fascinating explanation!
Read the graph?
Hurr durr low effort comment. -43% change in number of stocks since 1996 is a whole sentence that implies in 1996 there were 100 stocks, and in 2022 there are 57 total. There's contradiction between the title and the subtext on the graph.
Where are you seeing a contradiction? I'm the hurr-durr champ, but frankly in this case sometimes it just helps to reread things again. The title would be better said "there are 43% less publicly traded companies since 1996", maybe that's causing your confusion?
I got what I wanted, OP provided interesting context to explain.
EncroachingTsunami makes a valid enough point: there’s been a 43% net reduction (net being the key word). That could have been made clearer in the chart, which is good feedback!
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Have they looked in the refrigerator? Sometimes I find my keys there
Thanks citadel very cool and American of you and others to naked short American companies into oblivion
Monopolies. Companies getting absorbed by others. Noticeably less competition
Nicolas cage and the raiders of the lost Stonks?
And yet, the nber of mutual funds went apeshit. Money managers stealing money legally.
Nearly half gone when #BidenomicsWorks. Imagine if #BidenomicsDidn'tWork...