What would happen if a companies profits just stayed the same over a period of quarters? I obviously don’t understand it at all but isn’t it just unsustainable to expect growth indefinitely?
In: Economics
When publically owned, companies have to disclose quarterly reports to shareholders and the public. If those profits are routinely good, most people tend to want to buy stocks, which increases the trading price.
Privately held companies, either family owned, or private/angle investors only need to disclose reports according to the terms of the agreements, and never to the public. A private company actually has the ability to operate at a loss for a while as they retool and make longer term investments in themselves. For example in the early 2010s, after losing market share to the iPad, Dell took themselves private, invested a few years in design and overhaul, and came out in the mid 2010s with a better product line.
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