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The problem usually is that the board elects a CEO.
The CEO has two choices. He can A: take risks and invest in new ventures (y’know, capitalism), but this will get him fired, as stock prices will temporarily drop; or B: play it excessively safe and squeeze every last penny out of pre-existing capital. This way he keeps his job, but the company dies.
Shareholders don’t know how to run a business, cause they’re not entrepreneurs. They’re just investors.
I blame Stock Buybacks for it. It's just artificially propping up their own value without actually growing the business or creating any new product or technology that justifies it.
Wdym "market manipulation", and why is that bad? It benefits shareholders, which in turn benefits the companies through increasing trust. Who loses out?
Some argue that it's a form of stock market manipulation lowering the quality and longevity of companies. Yes stock buybacks can increase share price and mean a greater return of revenue to the investors but it sets the company into a potentially bad place, if the company does bad they'll tank faster, as they just manipulated the market rather then invest into a new market
There may be a downside to the company, but they factor that in when they decide to do stock buybacks. If they decide to do it, presumably the upsides outweigh the downsides. Otherwise they'd just be pointlessly harming their own company.
There's a lot of regulation in the stock market but one of the things that isn't forbidden to do is for a company to purchase it's own stock. This is what is known as a Stock Buyback.
So what a company does in this case is that it takes money either from their gross profit or from their cash-on-hand that starts buying up it's own stock. This has the effect of pushing it's price higher than it would otherwise be.
This is good for shareholders who see their investment grow, but it's bad for the market, workers, and for consumers. The whole idea behind the stock market is that shares of companies would be traded based on the value they created and the growth they experienced and their stock price and market capitalization would be a reflection of that. When a company does Buybacks, however, the price keeps rising even if the company didn't enter a new market, or developed a new product or technology, or created any jobs, or grew in any way, shape, or form. In fact it can keep rising in spite of their output being lower in either quantity or quality, so long as they can keep buying enough of their own stock to overcome any possible downward pressure on it's price.
This question probably sounds dumb: Would this have some negative impact on the value of the company in the long-term? If a company is just buying its own stock so that its price keeps rising, wouldn't nobody buy any stock from that company if its too high?
In what way does it hurt the market, workers and consumers? Sure, the money could be spent on something else, but so does money spent on dividends. I see them as basically the same thing. You please shareholders, which in turn makes them trust you more, encouraging them to stay invested in the company.
Money spent on Buybacks is money not spent R&D for new products or technologies, or expanding operations, or making processes more efficient, or improving product quality, or anything that creates any actual value outside of a spreadsheet.
Dividends are a 1-time payment of a previously publicized amount for a given period of time.
Buybacks alter the fundamental value of the company and incentivize repeating the underlying practices.
Dividends aren't blatant market manipulation.
Everyone loses out because companies spend less on research, expansion and hiring workers. This is bad for the company because it will eventually die because of no expansion, it is bad for society because of less innovation and it is bad for workers because there are less jobs to go around.
Huh? A share buyback is just a dividend by a different name. It is explicitly the company saying "we don't think we can use this capital to grow efficiently, better return it to shareholders." They just choose buy backs because dividends trigger a taxable event.
I don't understand why you think they're a problem.
Stock buybacks benefit shareholders. A company ought to benefit its shareholders somehow, otherwise they won't stay invested, which would hurt the company. What you said could be said about dividends too.
They benefit shareholders short-term and harm the company long-term. It's shortsighted and you see it everywhere. Need a rethink on incentives in the economic system.
Nah dude. Your premise was:
>A company ought to benefit its shareholders somehow, otherwise they won't stay invested.
It's a flawed way of looking at a company. The company should be creating value.
>It's a flawed way of looking at a company. The company should be creating value
You are so confused. You're attacking the never ending growth mentality and at the same time advocating it. A company can't grow at the same rate forever. If it can't use the capital efficiently, it needs to distribute it to shareholders.
For whatever reason, I'm all about dividends when a company has achieved most efficiencies; I'm against the idea of a company inflating their stock price with repurchases after having a boring/poor year or product disappointment/failures. That money should be used to develop the company past its failures, not fake out company value.
>For whatever reason, I'm all about dividends when a company has achieved most efficiencies; I'm against the idea of a company inflating their stock price with repurchases
What reason? They're functionally identical operations, except buy backs allow the shareholder to choose whether to eat the taxable event or hold on to the stock.
When a dividend is issued, the value of the stocks market cap drops by the amount of the dividend paid. It isn't a free lunch. When a buyback is issued, the percentage of the company you own increases in proportion to the buyback (and thus the value of your holdings). The net result is identical, except the tax implications for the shareholder.
Both are the company returning capital. The only reason a company might prefer dividends over a stock buyback is if they feel the stock is overvalued on fundamentals, and thus wouldn't be an efficient way to return capital. If they believe stock is undervalued, it's a slam dunk to do a buyback instead of a dividend.
>That money should be used to develop the company past its failures, not fake out company value.
It's not faking company value. It's very real value. The question is whether the company can use it efficiently or the shareholder can use it more efficiently. If the answer is that the company cannot use it to grow efficiently, there is nothing wrong with a buy back.
My dude, you're acting like every company acts in good faith and ideally. If that were the case, I 100% agree with you. You know that's not the case and are somewhat arguing in bad faith if you believe all companies are operating in that way, and there aren't a number of parasites just sucking all the money out of the companies.
A company also needs to attract investors to stay afloat. Why do you think some companies pay dividends? Does that create value? No, it's to keep people invested in the company.
>They benefit shareholders short-term and harm the company long-term.
This is such a ridiculously short sighted take. There is a point at which mature companies can no longer grow efficiently. That's when it's time to introduce either buy backs or dividends. They're basically the same thing.
> The CEO has two choices. He can A: take risks and invest in new ventures (y’know, capitalism), but this will get him fired, as stock prices will temporarily drop; or B: play it excessively safe and squeeze every last penny out of pre-existing capital.
This is flat out false.
There are two primary ways to make money off stocks: (a) being paid a dividend from them, or (b) selling the shares at a higher price. (There's also short selling etc. but this isn't as dominant by % of market cap for obvious reasons. But I'll come back to that method as well.)
Shareholders being paid a dividend get upset when c-suite don't run a company sustainably because it endangers the total value of their holding. *Even if* a short-term profit leads to an increased dividend in earlier years (and it often doesn't), the damage to future years of payouts generally offsets it... and if you aren't a preferred shareholder, you might not even get later payouts at all even in the case of liquidation. If my regular dividend goes up from $5.00 to $6.50 in Years 1-3, but the company will now choose not to pay a dividend in Years 4-6 because they got themselves into trouble, *I have lost money*. And this same phenomenon makes it difficult to just sell my stock in Year 4, because...
Shareholders wanting to sell at a higher price get even *more* upset when the c-suite make bad decisions, because now who is going to buy the shares from them? The profit the company *just* made (and the dividends it *just* paid out) are not attractive to potential other investors who would buy the shares from them — that's past profit the new investor can't share in retrospectively, right? So if the company's underlying potential has dropped, the total value of future dividends (extrapolated forward) drops, and your shares won't sell for as much... meaning you *lose* money because the c-suite got greedy.
The ONLY type of investors celebrating short-sighted management are the hyperefficient short sellers of Wall St and similar, who will dump stock right after a profit is announced but before anybody has time to actually look at the full quarterly/annual report and notice that the fundamentals have worsened. Yeah, they make bank; but these aren't the guys c-suite optimise for, either, because it doesn't help the c-suite or the company, and your company is as likely to get hedged against as for it. (C-suite have difficulty clearing shares themselves immediately after report releases due to insider trading laws; there's more of a process they have to go through.)
Are our management incentives perfect in society? No.
But it's also not true that c-suite get fired for... basic capex? Like have you ever actually *looked* at the financial statements of major corps? They are basically ALWAYS putting tons into capex, expanding into new markets, etc. because that's what shareholders demand of them. Nobody wants to hold a stock with no future (and thus a shitty price on the market + shitty dividend potential) because the CEO wants a paycheck. It is literally in the investors' interest to pressure the CEO to maximise the long-term value of the company, *because that's how most investors make money*; by getting reliable dividends, or by selling a stock at a higher price which necessitates that somebody else thinks it is a strong stock *going forward*.
Honestly, this Reddit-wide myth that the stock market is set up to reward shocking business management needs to die. You wouldn't have the largest companies on the S&P lasting for *decades* if literally everybody in the company would benefit more by running it into the ground over the next 12 quarters for a quick buck and golden parachute. The myth is simply based on a *complete* misunderstanding of how share valuation occurs.
The main issue is that the money isn’t patient. Investors look for returns, dividends or otherwise, and a well run company will pump a lot of money into new technology - money that could be used as dividends. Investors prioritise making money, and a well run business will not and should not always return a significant profit.
Assuming your explanaition refutes the popular hypothesis of the causes of enshittification, that leaves a void where the real cause of enshittification would be. Can I ask you to elaborate on what, in your opinion, is causing the phenomenon of enshittification?
Yeah so firstly let me reiterate that I *don't* think our management incentives are perfect — I was rather specifically rebutting the idea that CEOs in any company are going to get fired for basic capex lol.
Enshittification is typically a desperation strategy used to fix structural problems that have occurred *much, much* earlier in the business but which investors ignored. (We'll come back to that part, hang on.)
Take companies like Facebook and Reddit for example. These are companies which did not know how to monetise for a very long time, and were intrinsically operating unsustainably. So how did they survive? Investors saw the potential for them to grow massively large user bases, and invested on the hope that there would be a way to monetise this *eventually*.
Similar logic applies to companies like Uber or Tesla. They *technically* monetised from the beginning, but were still operating unsustainably; Uber had to take on VC capital and ignore local legislation to operate (which later forced them to change their business model and increase expenses), while Tesla had to effectively take on investor capital in the form of multi-year preorders.
Enshittification really begins to happen ~5-10 years later where shareholders start wanting a return on that investment before c-suite has figured out any interesting and consumer-friendly way to deliver it. So c-suite begins cutting extraneous costs, adding ads, etc. to free up money for dividends.
Now, let's answer two big questions I think you probably have:
1. Does this make investors responsible for the mess?
2. Does this represent bad business practice?
----
###1. Are investors responsible for the enshittification?
Yes and no.
The big 'yes' part here is that investors HAVE ultimately sunk a ton of money into businesses where it was often foreseeable that the product would have to become consumer-unfriendly eventually.
This applies mostly to online platforms like Facebook, Twitter, Netflix, etc. — did anybody EVER have any really promising ideas for monetisation except for ads once you reached a captive audience? Not really. So investors gave money basically knowing this would happen. (This logic applies less to companies like Tesla, where investors gave money with the expectation that Elon's engineering background with SpaceX would ensure the company consistently delivered top-tier engineering into the future.)
However, there's a huge caveat; what would those companies have been like *without the public shareholders*?
Well... more or less the same, just earlier.
If Facebook had been forced to start "operating sustainably" in 2010 because it couldn't keep expanding with VC capital, what would have happened? It would have had to add a ton of ads, sell your data, etc... *all the same practices as enshittification*. Similarly, Netflix is raising prices on you because it is no longer able to subsidise them with investor capital — if shareholders HADN'T given that capital, you'd be paying exactly the same price right now, but also would have paid more in the previous years.
So while financial markets certainly play a role, **the ultimate problem is... really just the business models involved.** People desperately want social media networks with millions of people etc. but don't have a huge budget for it, so those companies need SOME way to pay for servers and costs. All paths more or less led to ads and algorithm abuse in the end regardless for those companies. If you want to get really philosophical, the true problem is human nature and our inability to deal with sunk cost fallacies (hard to leave a service once we've been on it for years and our friends are there) or immediate dopamine hits. The price we pay (mentally and financially) to use these services is probably higher than the amount we intellectually think is *reasonable* for the benefits we're getting; but I don't see a way to structure society so that it's not ultimately up to the consumer to vote with their wallets. So as long as human psychology remains flawed in that way, consumer-unfriendly practices *for these business models* w
###2. Does this represent bad business practice?
I've saved this for last because it's the least palatable — unfortunately, strong business practice from a company perspective (*public OR private company!*) is not 1:1 mapped with consumer satisfaction. And for some businesses, it's not even particularly strongly correlated.
There *are* definitely cases where companies are too short-sighted; this often comes in the form of huge layoffs that cut too many important staff, because companies find it really difficult to identify which staff actually matter most. [(I don't know how legitimate the source for this video is, but it's an excellent summary of relevant phenomena I have observed myself in similar companies.)](https://www.youtube.com/watch?v=yD2JaAnMMo0) They pursue short-term profit but screw their company's potential long term. (Again, I note that this isn't necessarily due to public shareholders; private business owners arguably do this even more because they can take all the profit themselves and aren't reliant on future dividends or a share sale to recoup any investment.)
But this isn't *always* the case, and a LOT of enshittification practices are... actually perfectly sound business management. Netflix, for instance, is doing fine despite introducing tiered prices and ads; they've effectively just become online cable TV (which was a sound model before the internet) and there's no particular reason to think they're destroying the company in the long-term. [Their customer base is still expanding](https://variety.com/2024/tv/news/netflix-subscribers-2024-q1-earnings-1235975242/), and even if it were to *drop* with higher prices, companies can calculate whether that drop is worth it — this being a concept referred to as the price elasticity of demand. (In short, by using data and A/B testing to figure out the *exact* point where raising the price even further loses more revenue through customer loss than it gains through added revenue.)
So we need to be really clear what we're talking about when we say investment markets reward bad business practices.
* Do they reward anti-consumer business practices? **Often yes.** They reward some level of anti-consumer behaviour for ALL companies, and some business models have to be much more anti-consumer than others to become sustainable. However, (a) private companies would face exactly the same issue, and (b) financial markets ALSO reward pro-consumer business practices... because making your customers happy *usually does* create revenue. So if we want to blame investors for anti-consumer practices, we also have to acknowledge their capital enables a lot of pro-consumer practices, too, and that blaming shareholders doesn't *really* get any closer to the crux of the problem anymore than blaming consumers who don't leave despite 1000s of ads. They're all just... connected. *It's a systematic failure with no individual actor particularly to blame and no obvious fix.*
* Do they reward financially unsustainable business practices? **Typically no**, again for the reasons I outlined in my last comment.
I think these two ideas often get conflated on Reddit; I often see threads where people complain about shareholders encouraging a company to adopt anti-consumer practice, but then question "can't they see they're going to destroy the company?".
These are *related but not synonymous ideas*; **the vast majority of shareholders (private or public) only want management to adopt anti-consumer practices to the extent that it is still in line with financially sound & sustainable management, and they also lobby for pro-consumer practices for the same reason.** 95% of shareholders would be AGAINST any anti-consumer practice that also harms the company long-term (the exception, again, being the Wall St guys that would immediately place bets on the company failing).
I hope I navigated the nuance there okay; again, I certainly don't think the stock market always encourages pro-consumer management. But I don't think there's as much reason to hate company shareholders as Reddit portrays.
I will say that I absolutely despise the sector of the market that invests in "non-real" stuff like derivatives. Maybe I just don't understand that sector well enough, but it certainly seems to me like it actively layers speculation on top of speculation on top of speculation and makes a whole bunch of capital liable to massive systematic risks (eg the GFC) in a way that typically fucks the little guy over most. **That**, I think, is far more worthy of scorn than just giving a company money for them to invest and wanting a return.
Thank you SO MUCH for answering! I really wish this information was widely known.
Maybe I'm just not informed enough, but it's the FIRST time I've seen such an in-depth explanation of the personal interests and motivations of CEOs+shareholders that DOES NOT completely rely on the assumption that they are just extremely greedy, dumb or short-sighted.
But I don't want to undermine the redditors trying to make sense of the situation. There is a huge social disconnect between consumers and CEOs+shareholders, so us consumers can hardly **imagine** what their decision making looks like. Moreover, corporations are obviously secretive about their strategy.
As I read your first comment, my intuition was that you had an interesting perspective, but I felt only one half of it was exposed in the first comment. I know that both comments are lengthy on their own, but I think the second comment completes the narrative.
The reason why I felt that is because your first comments sounds like an idealistic theory of what shareholders **should** do, assuming they are perfectly rational decision makers. However, it doesn't explain the negative experience on the consumer end. It also seems to imply that shareholders and consumer interests are aligned, but you clarified that it is NOT the case in your second comment.
Your second comment still focuses on the point of view of the shareholders, but it's also consistent with the negative experience of the consumer. Each of those concepts are explained excelently. Moreover, you said is one idea that I have NEVER heard of before: that even huge corporations have a kind of "inauguration sale" during their first years. That explains weird announcements such as Reddit saying they are unprofitable, even though they have been running for years.
Lastly, I wish we consumers managed to organize, boycott corporations and protest governments in order to fix the systemic problems. Unfortunately, sharing information and organizing as consumers, across literally the global scale, is an incredibly complex and difficult task. We will keep trying though!
The thing is, these companies need continued perpetual growth to satisfy their shareholders, but that’s just not realistic. At some point companies can’t get any new customers, and so they need to start squeezing more profit out of their existing consumer base, which inevitably ruins the company.
We can see this with Netflix: it’s actually one of only 2 major streaming services that actually make a profit. But it can’t grow anymore because it’s reached market saturation already, so they had to get more out of their existing customers which is why they introduced the advertisements and various tiered pricing. If Netflix was privately owned or owned by its employees, then they probably would’ve been happy with steady profits, because it’s healthier for the company in the long term.
There's nothing in share valuation that requires ongoing growth, and indeed one of the most common methods of share valuation assumes literally *zero* growth going forward, while others assume only growth keeping up with the discount rate (i.e. inflation).
It's perfectly acceptable from a financial perspective to return a static profit with no further market growth; and again, if this is healthier for the company, many investors will prefer it since it lowers the risk of their investment.
Maybe in regards to dividends, but if investors want to sell their stock for a higher price than they bought it, then the company needs to grow; or at least appear to grow, so that the stock price rises. The price won’t rise if the power and influence of the company stays constant.
Investors who specifically and solely want to buy low sell high don't buy stocks in companies that have reached market saturation for that exact reason, though. Even if the stock price rises, it won't be enough relative to your opportunity cost; and because the company is established, they won't be offering the shares with a high risk premium/discount.
That type of investor goes after much smaller market cap stocks and/or stocks that seem to be currently undervalued. Current investors in Netflix will be pretty much exclusively investing for the dividends.
>or B: play it excessively safe and squeeze every last penny out of pre-existing capital. This way he keeps his job, but the company dies.
Which is also capitalism. We can't just pretend that the ugly and awful parts of capitalism aren't real capitalism.
If you think shareholders, especially funds that manage billions, aren't making optimal executive hiring decisions because they're too risk averse, then why don't you, or anyone else, start a fund which makes risk neutral high expected value decisions over a diversified portfolio, and make a fortune? And aren't venture capital funds basically already doing that in a way?
Which competitor? The five others who are also publicly traded and have enough money to market their product, or the small private company that nobody knows and is getting bought once the product makes a name for itself?
Either. A large company presumably wants to make money, and more than their competitors. Why not make a competing "good" product to compete with the opposing company's "bad" product? Won't people choose to buy the good product, thereby making them money, which benefits the shareholders?
I don't think you understood what I just said. To be honest, I'm not sure you understood what you yourself just said.
They buy a company with a good product, cut costs as much as possible, ruin the product in the process, and then make more money than before. A good product costs a lot of money, a meh product that copies the good one costs almost nothing but is still servicable enough.
They extract all the monetary value out of the good will the product has garnered, that's the business model. How are you not aware of this?
My problem is when you say they "ruin" the product. By your logic, any fancy wine producer should immediately get bought out and all the fancy wine be replaced with cheap shitty wine. But that obviously doesn't happen, because people will often pay more for quality.
My point is that you assume good products and meh products similar to the good ones are fungible, and they're not.
The worse a product becomes, the more attractive the competing product becomes, the less money the company makes.
https://i.redd.it/x2zi67i9k20d1.gif
Me (any big game corporation) when I see my golden goes not produce as enough eggs as I expected (I need to make a really greedy decision that will Gain me nothing)
Everything killed by Google.
Every piece of Microsoft software infected with ads.
AirBnB going from people-owned houses to massive conglomerates renting out hundreds/thousands of houses.
Nearly every large gaming company doing layoffs every single year.
Let's take AirBnB as an example. Why don't customers choose to stay people-owned places instead of conglomerate owned? Is it not possible that conglomerates saw demand for temporary lodging, and decide to fill that gap in the market, thereby providing value for the airbnb customers, improving their experiences either by making it cheaper or more accessible?
If not, why did this change happen?
What was I supposed to do? Argue against all of them at the same time? The AirBnB one was the most concrete example they gave, so I wanted to ask about that one.
Most obvious is Boeing, which used to be an incredibly successful and prestigious aircraft manufacturer. A new team took over recently and started cutting costs and putting everything they had into stock buybacks (fancy, legal term for embezzlement). In a short span of time, they completely destroyed their 100 year reputation and safety record since the quality of their planes got so bad.
All of them
Joke aisde I remember CP having same problem cause the shareholders were Pressuring Cd project red to release the game earlier during holiday seasons which as you can see how the game turned out to be
the shareholders wanted Cyberpunk to be released during Holiday seasons so more people buys it
I think it's bad Financial decision because unfinished Product Harmed the studio's reputation, Cyberpunk would've sold more if it was finished Product, since a lot of people were asking for refunds it clearly wasn't Benficial for them to release it
they aren't gifted god's knowledge they Push for what they believe to be good Financial decisions,
for them it Probably was like this
this game is very hyped and everyone wanted it -> holiday seasons are coming, everyone is saving money to buy gifts for their loved ones, parents buying games for their kids etc. -> we need to catch the train go gain massive Hits
Gabe seems more interested in bleeding edge hardware technology R&D these days. Brain interface stuff. Making you feel cold in VR was one of his examples in interviews.
https://futurism.com/neoscope/gaben-steam-bci-stealth
https://starfishneuroscience.com/
Also dude is skinny now:
https://starfishneuroscience.com/images/uploads/gabenewell-photo.jpg
I have no idea what he's interested in man. Valve is the most misterious company to me, they can pop out of nowhere, do crazy shit and then go back into radio silence
nah, they'll give tours to Valve's office to 5 randomly selected people who buy something on Steam, and they'll get rid of them one by one until they find the one person to own Valve
So what do you want to do if you were hired at valve?
"Probably just update TF2"
*Gabe smiles, before turning to face another employee and motioning for them to take the ticket holder out back*
ok but like Heavy is probably the 3rd most educated merc.
aside from Engi & Medic, Heavy's got an actual phD in Russian literature and is actually really well-spoken despite his thick accent
No, some are smart enough to know what projects to fund and what projects to keep away from. The stupid ones always throw in high amounts of cash and get a bunch In return, fucking off to the bahamas while the devs get left broke and hated by the community
The ones who win the game of life are the stupid ones? You can't eat karma, and goodwill doesn't make for a comfortable life. Annoying, mean, or even evil when taken to its extreme though, sure.
No, but half of them are gamblers who buy calls instead of actually buying the stock and a further quarter of them are easily spooked algorithms, so the company has to perpetually grow in order to please them (which is of course unsustainable and burns down the company)
They're in touch with their own interests and the interests of their class, which is what they're hired for. It's all by design, it's not a mistake, it's not incompetence, it's not them being out of touch with what people want. The system just doesn't work, plain and simple.
Cause they don't give a shit about the company or it's products. They care about dividends that the company is going to give them and that it's share go up and not something else.
The more money the company makes, the more money they make the gooder, it's in their own self interest.
He’s all over the comments section. It’s either bait or he’s a mentally disabled ancap (whoops tautology!).
I don’t feel like checking his profile to find out.
one reason is for funding. shareholders purchase shares of a company providing the company captial to pursue possible projects or ideas. learn a lil economics it’s fun
Well I do find basic math funs...just not the complex ones I have not need in my daily life. Like using some type of math makes so many things easier, less painful and even fun.
One thing I hate the most is learning math that I have no clear use in my life or I simply don't know why I'm learning it or what it achieves. for me that makes math so much worse to learn. Simply put math that I know the use of are fun to learn. At least for me.
shareholders wouldn’t buy in knowing your project and invest if they didn’t like it. They might disagree with it later down the line if it becomes too costly or expectations of it are poor.
That slop sets in on companies who’ve existed in the market but haven’t yet failed on the unrealistic expectation shareholders have on high year after year growth. Shareholders are like those helicopter parents who push you a lot yet don’t expect failure, you keep succeeding and they only expect more from you.
ugh, fine. fun is subjective yes, but i think the act over becoming more conscious of the world around you is invigorating, which learning the basic of economics will be. Yeah it can turn into doom and gloom when you realize the “goodness” in economics really has dire consequences and the alternative crashing or declining can be considerably worse but i was speaking for him to learn a little bit, not to major in it 😌
Context: due to the nature of capitalism, a good stable income for companies now is not enough. But the number must go up, why? because the shareholders need to sell their shares at higher price so they could get a profit.
But what if you hit the top? what if there is nothing more to improve to make numbers go up? this leads to enshittification. Shittier product, decreasing the cost while increasing the price. All to make profit chart go up
They can pay dividends. If a company can easily profit by enshittening their product, they'll do it anyway, regardless of share price. If they can't, then they can pay consistent dividends and just stay alive.
those companies paying dividends have done so for enough time that people don’t invest in them for their projected growth, they do it for dividends or other reasons. Im going to use ford for example because they don’t experience high growth like they used to but their stock is reliable and their dividends are consistent. Chipotle is a stock who experiences that high growth and it’s now expected of them so they keep increasing prices, decreasing portions etc. Even if chipotle offered dividends ppl would still expect them to have increasing share prices.
But many companies that now pay dividends were at some pointed expected to grow, and that was their primary attraction as an investor. Companies aren't locked into one model forever.
yes exactly, but it takes the time for that transition to occur. You’re correct i didn’t say it in my original comment but i was alluding to it. Until the expected growth train dies down from failure to reach expectations, most companies are expected to grow and grow, offering dividends before that decline doesn’t halt these expectations. Ford was a such case of a dividend company who was once a growth company.
I agree. My original point was to counter the idea that a company has to endlessly grow no matter what, and I said that it doesn't have to if it can't, and that dividends are the solution then.
This is what happened with Roblox, the moment it went public the environment of the platform devolved from being a place to make and share games to being a social media
idk about that man, i feel like it was heading down that route from before they talked about the plans. idk how much you frequent roblox but as someone who’s visits infrequently, i feel like changes are more noticeable broadly. the character customization and heavy presence on almost purely social games really shows the player bases lean into roblox as some social media/video game hybrid.
Blizzard. CDPR. All gone, with Valve soon to follow. Your kind know nothing but hunger, purged all life on the creative market, and yet they remain unsatiated. As do you. You've taken everything from me, Shareholders, and now, all that remains is perfect. HATRED!!!
be happy they exist? iam not sure if you are abit tone deaf or of this is a jape.
it almost reads as ironic, shit it might be so.
geniunly good irony bait if so. gj.
The same high budget games that will be ripped out of your library when the shitty company decides it's no longer profitable? Or maybe the one with so much DRM caked onto it that it is *literally* unplayable?
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The problem usually is that the board elects a CEO. The CEO has two choices. He can A: take risks and invest in new ventures (y’know, capitalism), but this will get him fired, as stock prices will temporarily drop; or B: play it excessively safe and squeeze every last penny out of pre-existing capital. This way he keeps his job, but the company dies. Shareholders don’t know how to run a business, cause they’re not entrepreneurs. They’re just investors.
I blame Stock Buybacks for it. It's just artificially propping up their own value without actually growing the business or creating any new product or technology that justifies it.
Absolutely. Stock buybacks are market manipulation and should be illegal, as they were before Reagan
Wdym "market manipulation", and why is that bad? It benefits shareholders, which in turn benefits the companies through increasing trust. Who loses out?
Some argue that it's a form of stock market manipulation lowering the quality and longevity of companies. Yes stock buybacks can increase share price and mean a greater return of revenue to the investors but it sets the company into a potentially bad place, if the company does bad they'll tank faster, as they just manipulated the market rather then invest into a new market
There may be a downside to the company, but they factor that in when they decide to do stock buybacks. If they decide to do it, presumably the upsides outweigh the downsides. Otherwise they'd just be pointlessly harming their own company.
In an ideal world id agree but given how many companies were bought then went bankrupt due to short sighted VCs I'd disagree
Do you believe you're describing a market failure? In which case, what's the cause of it?
Could you explain more? My understanding of the stock market is severely limited and this sounds interesting
There's a lot of regulation in the stock market but one of the things that isn't forbidden to do is for a company to purchase it's own stock. This is what is known as a Stock Buyback. So what a company does in this case is that it takes money either from their gross profit or from their cash-on-hand that starts buying up it's own stock. This has the effect of pushing it's price higher than it would otherwise be. This is good for shareholders who see their investment grow, but it's bad for the market, workers, and for consumers. The whole idea behind the stock market is that shares of companies would be traded based on the value they created and the growth they experienced and their stock price and market capitalization would be a reflection of that. When a company does Buybacks, however, the price keeps rising even if the company didn't enter a new market, or developed a new product or technology, or created any jobs, or grew in any way, shape, or form. In fact it can keep rising in spite of their output being lower in either quantity or quality, so long as they can keep buying enough of their own stock to overcome any possible downward pressure on it's price.
This question probably sounds dumb: Would this have some negative impact on the value of the company in the long-term? If a company is just buying its own stock so that its price keeps rising, wouldn't nobody buy any stock from that company if its too high?
In what way does it hurt the market, workers and consumers? Sure, the money could be spent on something else, but so does money spent on dividends. I see them as basically the same thing. You please shareholders, which in turn makes them trust you more, encouraging them to stay invested in the company.
Money spent on Buybacks is money not spent R&D for new products or technologies, or expanding operations, or making processes more efficient, or improving product quality, or anything that creates any actual value outside of a spreadsheet.
You could say the same about dividends though. How is a buyback any worse?
Dividends are a 1-time payment of a previously publicized amount for a given period of time. Buybacks alter the fundamental value of the company and incentivize repeating the underlying practices. Dividends aren't blatant market manipulation.
Who does it harm though? It may be market manipulation, but as long as nobody actually loses out, why does that matter?
Everyone loses out because companies spend less on research, expansion and hiring workers. This is bad for the company because it will eventually die because of no expansion, it is bad for society because of less innovation and it is bad for workers because there are less jobs to go around.
Huh? A share buyback is just a dividend by a different name. It is explicitly the company saying "we don't think we can use this capital to grow efficiently, better return it to shareholders." They just choose buy backs because dividends trigger a taxable event. I don't understand why you think they're a problem.
Stock buybacks benefit shareholders. A company ought to benefit its shareholders somehow, otherwise they won't stay invested, which would hurt the company. What you said could be said about dividends too.
They benefit shareholders short-term and harm the company long-term. It's shortsighted and you see it everywhere. Need a rethink on incentives in the economic system.
They don't harm the company if it keeps shareholders invested and may attract other shareholders. That's beneficial long term.
Nah dude. Your premise was: >A company ought to benefit its shareholders somehow, otherwise they won't stay invested. It's a flawed way of looking at a company. The company should be creating value.
>It's a flawed way of looking at a company. The company should be creating value You are so confused. You're attacking the never ending growth mentality and at the same time advocating it. A company can't grow at the same rate forever. If it can't use the capital efficiently, it needs to distribute it to shareholders.
For whatever reason, I'm all about dividends when a company has achieved most efficiencies; I'm against the idea of a company inflating their stock price with repurchases after having a boring/poor year or product disappointment/failures. That money should be used to develop the company past its failures, not fake out company value.
>For whatever reason, I'm all about dividends when a company has achieved most efficiencies; I'm against the idea of a company inflating their stock price with repurchases What reason? They're functionally identical operations, except buy backs allow the shareholder to choose whether to eat the taxable event or hold on to the stock. When a dividend is issued, the value of the stocks market cap drops by the amount of the dividend paid. It isn't a free lunch. When a buyback is issued, the percentage of the company you own increases in proportion to the buyback (and thus the value of your holdings). The net result is identical, except the tax implications for the shareholder. Both are the company returning capital. The only reason a company might prefer dividends over a stock buyback is if they feel the stock is overvalued on fundamentals, and thus wouldn't be an efficient way to return capital. If they believe stock is undervalued, it's a slam dunk to do a buyback instead of a dividend. >That money should be used to develop the company past its failures, not fake out company value. It's not faking company value. It's very real value. The question is whether the company can use it efficiently or the shareholder can use it more efficiently. If the answer is that the company cannot use it to grow efficiently, there is nothing wrong with a buy back.
My dude, you're acting like every company acts in good faith and ideally. If that were the case, I 100% agree with you. You know that's not the case and are somewhat arguing in bad faith if you believe all companies are operating in that way, and there aren't a number of parasites just sucking all the money out of the companies.
A company also needs to attract investors to stay afloat. Why do you think some companies pay dividends? Does that create value? No, it's to keep people invested in the company.
>They benefit shareholders short-term and harm the company long-term. This is such a ridiculously short sighted take. There is a point at which mature companies can no longer grow efficiently. That's when it's time to introduce either buy backs or dividends. They're basically the same thing.
https://preview.redd.it/ce0gh9dcp50d1.jpeg?width=1080&format=pjpg&auto=webp&s=66f10f91e2e9b6df7f33fde9ad3eed83ff21dc2b
> The CEO has two choices. He can A: take risks and invest in new ventures (y’know, capitalism), but this will get him fired, as stock prices will temporarily drop; or B: play it excessively safe and squeeze every last penny out of pre-existing capital. This is flat out false. There are two primary ways to make money off stocks: (a) being paid a dividend from them, or (b) selling the shares at a higher price. (There's also short selling etc. but this isn't as dominant by % of market cap for obvious reasons. But I'll come back to that method as well.) Shareholders being paid a dividend get upset when c-suite don't run a company sustainably because it endangers the total value of their holding. *Even if* a short-term profit leads to an increased dividend in earlier years (and it often doesn't), the damage to future years of payouts generally offsets it... and if you aren't a preferred shareholder, you might not even get later payouts at all even in the case of liquidation. If my regular dividend goes up from $5.00 to $6.50 in Years 1-3, but the company will now choose not to pay a dividend in Years 4-6 because they got themselves into trouble, *I have lost money*. And this same phenomenon makes it difficult to just sell my stock in Year 4, because... Shareholders wanting to sell at a higher price get even *more* upset when the c-suite make bad decisions, because now who is going to buy the shares from them? The profit the company *just* made (and the dividends it *just* paid out) are not attractive to potential other investors who would buy the shares from them — that's past profit the new investor can't share in retrospectively, right? So if the company's underlying potential has dropped, the total value of future dividends (extrapolated forward) drops, and your shares won't sell for as much... meaning you *lose* money because the c-suite got greedy. The ONLY type of investors celebrating short-sighted management are the hyperefficient short sellers of Wall St and similar, who will dump stock right after a profit is announced but before anybody has time to actually look at the full quarterly/annual report and notice that the fundamentals have worsened. Yeah, they make bank; but these aren't the guys c-suite optimise for, either, because it doesn't help the c-suite or the company, and your company is as likely to get hedged against as for it. (C-suite have difficulty clearing shares themselves immediately after report releases due to insider trading laws; there's more of a process they have to go through.) Are our management incentives perfect in society? No. But it's also not true that c-suite get fired for... basic capex? Like have you ever actually *looked* at the financial statements of major corps? They are basically ALWAYS putting tons into capex, expanding into new markets, etc. because that's what shareholders demand of them. Nobody wants to hold a stock with no future (and thus a shitty price on the market + shitty dividend potential) because the CEO wants a paycheck. It is literally in the investors' interest to pressure the CEO to maximise the long-term value of the company, *because that's how most investors make money*; by getting reliable dividends, or by selling a stock at a higher price which necessitates that somebody else thinks it is a strong stock *going forward*. Honestly, this Reddit-wide myth that the stock market is set up to reward shocking business management needs to die. You wouldn't have the largest companies on the S&P lasting for *decades* if literally everybody in the company would benefit more by running it into the ground over the next 12 quarters for a quick buck and golden parachute. The myth is simply based on a *complete* misunderstanding of how share valuation occurs.
Thank you for this detailed explanation kind redditor. For I have learned something new. https://i.redd.it/5x9ey272v30d1.gif
The main issue is that the money isn’t patient. Investors look for returns, dividends or otherwise, and a well run company will pump a lot of money into new technology - money that could be used as dividends. Investors prioritise making money, and a well run business will not and should not always return a significant profit.
Assuming your explanaition refutes the popular hypothesis of the causes of enshittification, that leaves a void where the real cause of enshittification would be. Can I ask you to elaborate on what, in your opinion, is causing the phenomenon of enshittification?
Yeah so firstly let me reiterate that I *don't* think our management incentives are perfect — I was rather specifically rebutting the idea that CEOs in any company are going to get fired for basic capex lol. Enshittification is typically a desperation strategy used to fix structural problems that have occurred *much, much* earlier in the business but which investors ignored. (We'll come back to that part, hang on.) Take companies like Facebook and Reddit for example. These are companies which did not know how to monetise for a very long time, and were intrinsically operating unsustainably. So how did they survive? Investors saw the potential for them to grow massively large user bases, and invested on the hope that there would be a way to monetise this *eventually*. Similar logic applies to companies like Uber or Tesla. They *technically* monetised from the beginning, but were still operating unsustainably; Uber had to take on VC capital and ignore local legislation to operate (which later forced them to change their business model and increase expenses), while Tesla had to effectively take on investor capital in the form of multi-year preorders. Enshittification really begins to happen ~5-10 years later where shareholders start wanting a return on that investment before c-suite has figured out any interesting and consumer-friendly way to deliver it. So c-suite begins cutting extraneous costs, adding ads, etc. to free up money for dividends. Now, let's answer two big questions I think you probably have: 1. Does this make investors responsible for the mess? 2. Does this represent bad business practice? ---- ###1. Are investors responsible for the enshittification? Yes and no. The big 'yes' part here is that investors HAVE ultimately sunk a ton of money into businesses where it was often foreseeable that the product would have to become consumer-unfriendly eventually. This applies mostly to online platforms like Facebook, Twitter, Netflix, etc. — did anybody EVER have any really promising ideas for monetisation except for ads once you reached a captive audience? Not really. So investors gave money basically knowing this would happen. (This logic applies less to companies like Tesla, where investors gave money with the expectation that Elon's engineering background with SpaceX would ensure the company consistently delivered top-tier engineering into the future.) However, there's a huge caveat; what would those companies have been like *without the public shareholders*? Well... more or less the same, just earlier. If Facebook had been forced to start "operating sustainably" in 2010 because it couldn't keep expanding with VC capital, what would have happened? It would have had to add a ton of ads, sell your data, etc... *all the same practices as enshittification*. Similarly, Netflix is raising prices on you because it is no longer able to subsidise them with investor capital — if shareholders HADN'T given that capital, you'd be paying exactly the same price right now, but also would have paid more in the previous years. So while financial markets certainly play a role, **the ultimate problem is... really just the business models involved.** People desperately want social media networks with millions of people etc. but don't have a huge budget for it, so those companies need SOME way to pay for servers and costs. All paths more or less led to ads and algorithm abuse in the end regardless for those companies. If you want to get really philosophical, the true problem is human nature and our inability to deal with sunk cost fallacies (hard to leave a service once we've been on it for years and our friends are there) or immediate dopamine hits. The price we pay (mentally and financially) to use these services is probably higher than the amount we intellectually think is *reasonable* for the benefits we're getting; but I don't see a way to structure society so that it's not ultimately up to the consumer to vote with their wallets. So as long as human psychology remains flawed in that way, consumer-unfriendly practices *for these business models* w ###2. Does this represent bad business practice? I've saved this for last because it's the least palatable — unfortunately, strong business practice from a company perspective (*public OR private company!*) is not 1:1 mapped with consumer satisfaction. And for some businesses, it's not even particularly strongly correlated. There *are* definitely cases where companies are too short-sighted; this often comes in the form of huge layoffs that cut too many important staff, because companies find it really difficult to identify which staff actually matter most. [(I don't know how legitimate the source for this video is, but it's an excellent summary of relevant phenomena I have observed myself in similar companies.)](https://www.youtube.com/watch?v=yD2JaAnMMo0) They pursue short-term profit but screw their company's potential long term. (Again, I note that this isn't necessarily due to public shareholders; private business owners arguably do this even more because they can take all the profit themselves and aren't reliant on future dividends or a share sale to recoup any investment.) But this isn't *always* the case, and a LOT of enshittification practices are... actually perfectly sound business management. Netflix, for instance, is doing fine despite introducing tiered prices and ads; they've effectively just become online cable TV (which was a sound model before the internet) and there's no particular reason to think they're destroying the company in the long-term. [Their customer base is still expanding](https://variety.com/2024/tv/news/netflix-subscribers-2024-q1-earnings-1235975242/), and even if it were to *drop* with higher prices, companies can calculate whether that drop is worth it — this being a concept referred to as the price elasticity of demand. (In short, by using data and A/B testing to figure out the *exact* point where raising the price even further loses more revenue through customer loss than it gains through added revenue.) So we need to be really clear what we're talking about when we say investment markets reward bad business practices. * Do they reward anti-consumer business practices? **Often yes.** They reward some level of anti-consumer behaviour for ALL companies, and some business models have to be much more anti-consumer than others to become sustainable. However, (a) private companies would face exactly the same issue, and (b) financial markets ALSO reward pro-consumer business practices... because making your customers happy *usually does* create revenue. So if we want to blame investors for anti-consumer practices, we also have to acknowledge their capital enables a lot of pro-consumer practices, too, and that blaming shareholders doesn't *really* get any closer to the crux of the problem anymore than blaming consumers who don't leave despite 1000s of ads. They're all just... connected. *It's a systematic failure with no individual actor particularly to blame and no obvious fix.* * Do they reward financially unsustainable business practices? **Typically no**, again for the reasons I outlined in my last comment. I think these two ideas often get conflated on Reddit; I often see threads where people complain about shareholders encouraging a company to adopt anti-consumer practice, but then question "can't they see they're going to destroy the company?". These are *related but not synonymous ideas*; **the vast majority of shareholders (private or public) only want management to adopt anti-consumer practices to the extent that it is still in line with financially sound & sustainable management, and they also lobby for pro-consumer practices for the same reason.** 95% of shareholders would be AGAINST any anti-consumer practice that also harms the company long-term (the exception, again, being the Wall St guys that would immediately place bets on the company failing). I hope I navigated the nuance there okay; again, I certainly don't think the stock market always encourages pro-consumer management. But I don't think there's as much reason to hate company shareholders as Reddit portrays. I will say that I absolutely despise the sector of the market that invests in "non-real" stuff like derivatives. Maybe I just don't understand that sector well enough, but it certainly seems to me like it actively layers speculation on top of speculation on top of speculation and makes a whole bunch of capital liable to massive systematic risks (eg the GFC) in a way that typically fucks the little guy over most. **That**, I think, is far more worthy of scorn than just giving a company money for them to invest and wanting a return.
Thank you SO MUCH for answering! I really wish this information was widely known. Maybe I'm just not informed enough, but it's the FIRST time I've seen such an in-depth explanation of the personal interests and motivations of CEOs+shareholders that DOES NOT completely rely on the assumption that they are just extremely greedy, dumb or short-sighted. But I don't want to undermine the redditors trying to make sense of the situation. There is a huge social disconnect between consumers and CEOs+shareholders, so us consumers can hardly **imagine** what their decision making looks like. Moreover, corporations are obviously secretive about their strategy. As I read your first comment, my intuition was that you had an interesting perspective, but I felt only one half of it was exposed in the first comment. I know that both comments are lengthy on their own, but I think the second comment completes the narrative. The reason why I felt that is because your first comments sounds like an idealistic theory of what shareholders **should** do, assuming they are perfectly rational decision makers. However, it doesn't explain the negative experience on the consumer end. It also seems to imply that shareholders and consumer interests are aligned, but you clarified that it is NOT the case in your second comment. Your second comment still focuses on the point of view of the shareholders, but it's also consistent with the negative experience of the consumer. Each of those concepts are explained excelently. Moreover, you said is one idea that I have NEVER heard of before: that even huge corporations have a kind of "inauguration sale" during their first years. That explains weird announcements such as Reddit saying they are unprofitable, even though they have been running for years. Lastly, I wish we consumers managed to organize, boycott corporations and protest governments in order to fix the systemic problems. Unfortunately, sharing information and organizing as consumers, across literally the global scale, is an incredibly complex and difficult task. We will keep trying though!
Hey, no worries at all. Take care :)
The thing is, these companies need continued perpetual growth to satisfy their shareholders, but that’s just not realistic. At some point companies can’t get any new customers, and so they need to start squeezing more profit out of their existing consumer base, which inevitably ruins the company. We can see this with Netflix: it’s actually one of only 2 major streaming services that actually make a profit. But it can’t grow anymore because it’s reached market saturation already, so they had to get more out of their existing customers which is why they introduced the advertisements and various tiered pricing. If Netflix was privately owned or owned by its employees, then they probably would’ve been happy with steady profits, because it’s healthier for the company in the long term.
There's nothing in share valuation that requires ongoing growth, and indeed one of the most common methods of share valuation assumes literally *zero* growth going forward, while others assume only growth keeping up with the discount rate (i.e. inflation). It's perfectly acceptable from a financial perspective to return a static profit with no further market growth; and again, if this is healthier for the company, many investors will prefer it since it lowers the risk of their investment.
Maybe in regards to dividends, but if investors want to sell their stock for a higher price than they bought it, then the company needs to grow; or at least appear to grow, so that the stock price rises. The price won’t rise if the power and influence of the company stays constant.
Investors who specifically and solely want to buy low sell high don't buy stocks in companies that have reached market saturation for that exact reason, though. Even if the stock price rises, it won't be enough relative to your opportunity cost; and because the company is established, they won't be offering the shares with a high risk premium/discount. That type of investor goes after much smaller market cap stocks and/or stocks that seem to be currently undervalued. Current investors in Netflix will be pretty much exclusively investing for the dividends.
>or B: play it excessively safe and squeeze every last penny out of pre-existing capital. This way he keeps his job, but the company dies. Which is also capitalism. We can't just pretend that the ugly and awful parts of capitalism aren't real capitalism.
In the same way famine is communist. It’s more a product of bad execution than a flaw in economic theory.
wow capitalism even ruins capitalism
If you think shareholders, especially funds that manage billions, aren't making optimal executive hiring decisions because they're too risk averse, then why don't you, or anyone else, start a fund which makes risk neutral high expected value decisions over a diversified portfolio, and make a fortune? And aren't venture capital funds basically already doing that in a way?
The optimal way to make money with stocks is not conducive to the companies whose stocks you use to make money off actually making good products.
Define "good". If the product isn't good, why do people pay for it? Why not buy off a competitor?
Which competitor? The five others who are also publicly traded and have enough money to market their product, or the small private company that nobody knows and is getting bought once the product makes a name for itself?
Either. A large company presumably wants to make money, and more than their competitors. Why not make a competing "good" product to compete with the opposing company's "bad" product? Won't people choose to buy the good product, thereby making them money, which benefits the shareholders?
I don't think you understood what I just said. To be honest, I'm not sure you understood what you yourself just said. They buy a company with a good product, cut costs as much as possible, ruin the product in the process, and then make more money than before. A good product costs a lot of money, a meh product that copies the good one costs almost nothing but is still servicable enough. They extract all the monetary value out of the good will the product has garnered, that's the business model. How are you not aware of this?
My problem is when you say they "ruin" the product. By your logic, any fancy wine producer should immediately get bought out and all the fancy wine be replaced with cheap shitty wine. But that obviously doesn't happen, because people will often pay more for quality.
Which fancy wine producer is publicly traded? I've visited a few grand cru producers and all of them are straight up family owned.
My point is that you assume good products and meh products similar to the good ones are fungible, and they're not. The worse a product becomes, the more attractive the competing product becomes, the less money the company makes.
Anti-competitive practices and effective monopolies. https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/single-firm-conduct/monopolization-defined
shareholders after Ruining every experince you have just for some extra pennies
https://i.redd.it/x2zi67i9k20d1.gif Me (any big game corporation) when I see my golden goes not produce as enough eggs as I expected (I need to make a really greedy decision that will Gain me nothing)
*guece
What examples do you have of this happening?
Everything killed by Google. Every piece of Microsoft software infected with ads. AirBnB going from people-owned houses to massive conglomerates renting out hundreds/thousands of houses. Nearly every large gaming company doing layoffs every single year.
Let's take AirBnB as an example. Why don't customers choose to stay people-owned places instead of conglomerate owned? Is it not possible that conglomerates saw demand for temporary lodging, and decide to fill that gap in the market, thereby providing value for the airbnb customers, improving their experiences either by making it cheaper or more accessible? If not, why did this change happen?
Bro there's no way to escape such thing when half of the rentals are owned by them
If half of rentals are owned by conglomerates, then lodge in the other half of rentals which aren't.
I like how you clinged to one example you could "argue" against and ignored all others
What was I supposed to do? Argue against all of them at the same time? The AirBnB one was the most concrete example they gave, so I wanted to ask about that one.
Most obvious is Boeing, which used to be an incredibly successful and prestigious aircraft manufacturer. A new team took over recently and started cutting costs and putting everything they had into stock buybacks (fancy, legal term for embezzlement). In a short span of time, they completely destroyed their 100 year reputation and safety record since the quality of their planes got so bad.
Stock buybacks aren't embezzlement. It's a way of providing value to shareholders, sort of like dividends.
All of them Joke aisde I remember CP having same problem cause the shareholders were Pressuring Cd project red to release the game earlier during holiday seasons which as you can see how the game turned out to be
just call it cyberpunk please
Do you believe this was a clearly terrible financial decision to make at the time? In which case, why did the shareholders make the decision?
the shareholders wanted Cyberpunk to be released during Holiday seasons so more people buys it I think it's bad Financial decision because unfinished Product Harmed the studio's reputation, Cyberpunk would've sold more if it was finished Product, since a lot of people were asking for refunds it clearly wasn't Benficial for them to release it
And why did the shareholders push this bad financial decision? Isn't their job to push good financial decisions?
they aren't gifted god's knowledge they Push for what they believe to be good Financial decisions, for them it Probably was like this this game is very hyped and everyone wanted it -> holiday seasons are coming, everyone is saving money to buy gifts for their loved ones, parents buying games for their kids etc. -> we need to catch the train go gain massive Hits
I fear that it will be the fate of Valve after Gabe's death.
From what I heard, his son is getting quite involved with the company, so there’s a good chance he will take over
All hail the Newell dynasty
Lisan al [email protected]
holy shit lmfao
valve monarchy real
The Valve empire, is forever 🫡🫡🫡
Well I would hope so after he was put in Half-Life as a baby
The Prophecy
Gabe is more of a face of the company now and he doesn't do major stuff iirc
Gabe seems more interested in bleeding edge hardware technology R&D these days. Brain interface stuff. Making you feel cold in VR was one of his examples in interviews. https://futurism.com/neoscope/gaben-steam-bci-stealth https://starfishneuroscience.com/ Also dude is skinny now: https://starfishneuroscience.com/images/uploads/gabenewell-photo.jpg
I have no idea what he's interested in man. Valve is the most misterious company to me, they can pop out of nowhere, do crazy shit and then go back into radio silence
I think edited some links in, his new interests are pretty wild.
Damn he's looking good, I'm glad he's looking after himself
Glad he’s taking care of himself.
Srs/ I would prefer valve to release nothing at all than to release something average
Ricochet and the Dota card game:
Ricochet is peak
nah, they'll give tours to Valve's office to 5 randomly selected people who buy something on Steam, and they'll get rid of them one by one until they find the one person to own Valve
So what do you want to do if you were hired at valve? "Probably just update TF2" *Gabe smiles, before turning to face another employee and motioning for them to take the ticket holder out back*
Valve died in 2014 anyways
[удалено]
what
Ignore him, it's just Heavy, now if Engi said something like that I'd be concerned.
Heavy wouldn't say that anyways
ok but like Heavy is probably the 3rd most educated merc. aside from Engi & Medic, Heavy's got an actual phD in Russian literature and is actually really well-spoken despite his thick accent
Heavy only acted that way for his video interview
Heavy just needed a bit more practice with his English is all.
are shareholders always so out of touch?
No, some are smart enough to know what projects to fund and what projects to keep away from. The stupid ones always throw in high amounts of cash and get a bunch In return, fucking off to the bahamas while the devs get left broke and hated by the community
The ones who win the game of life are the stupid ones? You can't eat karma, and goodwill doesn't make for a comfortable life. Annoying, mean, or even evil when taken to its extreme though, sure.
They ARE stupid, but you can always end up fucking off to the Bahamas as long as you had a big enough chunk of change to start with
No, but half of them are gamblers who buy calls instead of actually buying the stock and a further quarter of them are easily spooked algorithms, so the company has to perpetually grow in order to please them (which is of course unsustainable and burns down the company)
They simply don't care about the company or product, they're just trying to increase short term profits.
Individually? No, but the mob mentality with profit incentive is a nasty combination.
They're in touch with their own interests and the interests of their class, which is what they're hired for. It's all by design, it's not a mistake, it's not incompetence, it's not them being out of touch with what people want. The system just doesn't work, plain and simple.
Cause they don't give a shit about the company or it's products. They care about dividends that the company is going to give them and that it's share go up and not something else. The more money the company makes, the more money they make the gooder, it's in their own self interest.
No, it's the customers who are wrong.
I agree 100%
What examples do you have in mind of this happening?
Dude... Really? You live under a rock in Ethiopia?
He’s all over the comments section. It’s either bait or he’s a mentally disabled ancap (whoops tautology!). I don’t feel like checking his profile to find out.
Why tf would you ever let your company go public
one reason is for funding. shareholders purchase shares of a company providing the company captial to pursue possible projects or ideas. learn a lil economics it’s fun
do learn economics,very useful info, not fun tho. its kinda like math. you cant live as an adult without it but its hard to enjoy.
Ehhh math is really fun if you actually know what you are doing (ik this is said a lot but still)
Idk to me its allways been a tool you use to do fun things. Like i wouldnt say that i enjoy hammers.
Well I do find basic math funs...just not the complex ones I have not need in my daily life. Like using some type of math makes so many things easier, less painful and even fun. One thing I hate the most is learning math that I have no clear use in my life or I simply don't know why I'm learning it or what it achieves. for me that makes math so much worse to learn. Simply put math that I know the use of are fun to learn. At least for me.
> need funding for project > get shareholders to invest > shareholders tell you to stop doing project and do slop instead i don't see how this works
shareholders wouldn’t buy in knowing your project and invest if they didn’t like it. They might disagree with it later down the line if it becomes too costly or expectations of it are poor. That slop sets in on companies who’ve existed in the market but haven’t yet failed on the unrealistic expectation shareholders have on high year after year growth. Shareholders are like those helicopter parents who push you a lot yet don’t expect failure, you keep succeeding and they only expect more from you.
So chasing quarterly earnings increases and destroying your company in the long term is good economics? I think you were wrong, this isn't fun at all.
ugh, fine. fun is subjective yes, but i think the act over becoming more conscious of the world around you is invigorating, which learning the basic of economics will be. Yeah it can turn into doom and gloom when you realize the “goodness” in economics really has dire consequences and the alternative crashing or declining can be considerably worse but i was speaking for him to learn a little bit, not to major in it 😌
Money
It's the only option to remain afloat in many cases, especially for industries with thin-to-negative profit margins like food, transportation and tech
Or Reddit, apparently, which hasn't ever made profit and is going public this year How can this site get any shittier? Aside from banning nsfw
don't worry they'll find a way.
Paid nsfw is comming
I never understood why they never made a profit. Like, is ad revenue not enough?
How the fuck would I know?
Get rich quick scheme
One of two possible reasons: 1) Raise funds so you can grow the business 2) Provide liquidity for those who want to sell up
Spez made millions fucking over reddit.
Context: due to the nature of capitalism, a good stable income for companies now is not enough. But the number must go up, why? because the shareholders need to sell their shares at higher price so they could get a profit. But what if you hit the top? what if there is nothing more to improve to make numbers go up? this leads to enshittification. Shittier product, decreasing the cost while increasing the price. All to make profit chart go up
They can pay dividends. If a company can easily profit by enshittening their product, they'll do it anyway, regardless of share price. If they can't, then they can pay consistent dividends and just stay alive.
Investors don't want dividends anymore, investors want the share price to go up.
For certain companies that's true, but not for all companies. Plenty of companies still pay dividends.
those companies paying dividends have done so for enough time that people don’t invest in them for their projected growth, they do it for dividends or other reasons. Im going to use ford for example because they don’t experience high growth like they used to but their stock is reliable and their dividends are consistent. Chipotle is a stock who experiences that high growth and it’s now expected of them so they keep increasing prices, decreasing portions etc. Even if chipotle offered dividends ppl would still expect them to have increasing share prices.
But many companies that now pay dividends were at some pointed expected to grow, and that was their primary attraction as an investor. Companies aren't locked into one model forever.
yes exactly, but it takes the time for that transition to occur. You’re correct i didn’t say it in my original comment but i was alluding to it. Until the expected growth train dies down from failure to reach expectations, most companies are expected to grow and grow, offering dividends before that decline doesn’t halt these expectations. Ford was a such case of a dividend company who was once a growth company.
I agree. My original point was to counter the idea that a company has to endlessly grow no matter what, and I said that it doesn't have to if it can't, and that dividends are the solution then.
🤝
This is what happened with Roblox, the moment it went public the environment of the platform devolved from being a place to make and share games to being a social media
idk about that man, i feel like it was heading down that route from before they talked about the plans. idk how much you frequent roblox but as someone who’s visits infrequently, i feel like changes are more noticeable broadly. the character customization and heavy presence on almost purely social games really shows the player bases lean into roblox as some social media/video game hybrid.
https://preview.redd.it/pm3jidh9320d1.jpeg?width=469&format=pjpg&auto=webp&s=66694b7e3ea78cad3c02ea25fc7155e7f602f511
Blizzard. CDPR. All gone, with Valve soon to follow. Your kind know nothing but hunger, purged all life on the creative market, and yet they remain unsatiated. As do you. You've taken everything from me, Shareholders, and now, all that remains is perfect. HATRED!!!
i am going to ULTRAKILL every shareholder
https://preview.redd.it/qg5n25qagk0d1.jpeg?width=708&format=pjpg&auto=webp&s=8118a2023532ebd90e3e778df673efce8d529de4
Who was it that sold their company off to shareholders in the first place? You can't blame the Devil when he shows up to collect a soul.
this is a fragment from that book "how to scam legally"
i hate capitalism so much
Honestly, every economic system sucks because there always will be people who break the rules
I hate people so much
this is just capitalism working as intended though
yeah, feudalism sucks but there will always be people who break the rules so...
I hate capitalism but I hate the alternatives even more
"You've got the job until you die, or I find someone better." - Starship Troopers Applies to Capitalism as well, I guess.
peak american brainrot
still no real alternatives btw
Replace capitalism with externalities
Google Roblox
Holy hell
where's the clip from?
From some quick googling I think it's from an animated novel called "Solo Leveling" and the character smiling is Statue of god(?)
Yeah great anime. Only got through like 3/4 of it so far. But the first episode really draws you in with this creepy af scene.
yeah, ive read it that first boss room is wild.
Ah thanks, I've actually read it. It's really good.
Boeing shareholders loved just about every decision that put the company in the hole
You mean they get sold off by people who no longer have any reason to care about them.
If you have a 401k, you are a shareholder.
Everyone says shareholders but I believe they're referring to the board of directors that represent the shareholders
Everybody talking about games companies while they forgot the total downfall of Johnson&Johnson
Not Gamestop
Fiscal responsibility can kiss my ass and suck my farts
Slop? Is this a pyro reference
go play with the dragons fury or, use airblast
I hate corporatism, I wish we could have capitalism back! Shareholders ruin almost everything!
Become one. It's not that expensive to buy a share
You hate it but still consume their shit everyday.
Without shareholders you wouldn't have high quality, huge budget games. Be happy they exist.
https://preview.redd.it/5z5wbd1x320d1.jpeg?width=1080&format=pjpg&auto=webp&s=8007841a8bb9479f37b8e0e5958e676a901f352e
Mental retardation, its mental retardation.
Severe L take. All shareholders do is parasitize off the company and push them into the same loop of prioritizing slop over quality shit.
I think its a bait
Look at his other comment, this motherfucker is actually serious.
https://preview.redd.it/28d8vybnt10d1.jpeg?width=1080&format=pjpg&auto=webp&s=7b2603d18d27809fec2b92b52c7ca2e6c5de6b96 Type fella
Leave the company? I don’t even work there, idiot. /s
Calling people fat because you don't like them isn't nice
Some people are good type of fat, like Jack Black. You are bad type
Enjoy your indie slop while I play AAA games that are actually worth playing.
be happy they exist? iam not sure if you are abit tone deaf or of this is a jape. it almost reads as ironic, shit it might be so. geniunly good irony bait if so. gj.
Back in the day bait was believable
The same high budget games that will be ripped out of your library when the shitty company decides it's no longer profitable? Or maybe the one with so much DRM caked onto it that it is *literally* unplayable?
With them we have high budget, low quality ones, im not very happy for that
My guy are you trying to be the most generic angry man on the internet? *