Why do companies need to keep posting ever increasing profits? How is this tenable?

Question

Like, Company A posts 5 Billion in profits. But if they post 4.9 billion in profits next year it’s a serious failing on the company’s part, so they layoff 20% of their employees to ensure profits. Am I reading this wrong?

In: Economics

Answer 1

They need to make a profit year on end because shareholders want to sell their stocks at a higher value than what they bought them for.

This doesn’t apply to privately owned companies, by the way.