Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤
No. of Recommendations: 13
Since the late 1990s, the number of US publicly traded companies has plunged from just over 8K in 1996 to about 4.6K in 2022. (It’s bounced back a bit more recently.)
Just a handful of giant, financially powerful technology companies have snapped up literally hundreds of smaller firms since the late '90s. Data from Crunchbase shows that Google, Microsoft, Apple, Meta, Amazon, and Nvidia have together acquired an eye-watering 875 companies.
https://sherwood.news/markets/the-number-of-public...
No. of Recommendations: 13
Data from Crunchbase shows that Google, Microsoft, Apple, Meta, Amazon, and Nvidia have together acquired an eye-watering 875 companies.
I think (?) that's all acquisitions big enough to make the press, not just public ones.
Despite the fact that many of the acquired private firms might later have gone public, this number probably can't be directly compared to the drop in listings.
One obvious factor is that it's extremely expensive and time consuming to be a public firm, and both of those things are vastly more onerous than they were in the olden days.
I think the largest single factor is that companies no longer need public markets in order to raise money, whether debt or equity. Maybe if real interest rates stay higher for a while that will help the situation.
Jim
No. of Recommendations: 1
https://sherwood.news/markets/the-number-of-public...Looking at the chart, my question is why did the number of listed companies [skyrocket] 160%, in two or three years, during the late 70's/early 80's!? It took approximately 13 years to rise another 100%, until '96.
Twenty-seven years since the high is not exactly a "plunge."
Why did it rise so quickly in the late 70's? Does anyone know???
Thanks.
No. of Recommendations: 14
Many companies went public in the 1970s due to high inflation and taxes, which made entrepreneurship and raising capital through public markets more attractive than traditional employment or debt financing. Specifically:
1)High income tax rates, with a top marginal rate of 70%, incentivized entrepreneurs to start their own companies rather than work for someone else and pay exorbitant taxes on their income.
2)Rampant inflation, peaking at over 11% in 1974, eroded the real value of debt and made equity financing more appealing.
3)Companies could raise capital by going public without taking on crippling debt burdens.
4)The stagnant stock market of the 1970s, with the S&P 500 returning just 17% for the entire decade before adjusting for inflation, drove bright minds away from traditional corporate jobs and toward entrepreneurial ventures.
Regulatory changes like the end of fixed commission rates in 1975 made it easier and cheaper for companies to go public.
A prime example is Walmart, which conducted its initial public offering in 1970 to raise capital for expansion after accumulating too much debt from bank loans. The IPO allowed Walmart's founders to pay down debt while funding further growth through equity rather than more loans. Many other pioneering technology companies like Apple, Microsoft and Oracle were also founded in the 1970s.
No. of Recommendations: 3
Nasdaq was founded in 1971.
No. of Recommendations: 5
Interesting. I really hope we don’t relive the 70’s, but nice to be familiar with history, as Twain has suggested.
I love WEB’s profound and sobering Fortune article from that era (1977) & try to reread it 1-2x/ year.
https://fortune.com/2011/06/12/buffett-how-inflati...
No. of Recommendations: 2
The late 1970’s and early 80’s saw the rise and fall of the Denver OTC “penny stock” scene. A nasty fad, people threw together a company, a few experienced professionals, a bit of a plan, and issued stock at $0.10 a share. A bit of positive news could easily bump stock to 30 or 40 cents. Getting in on a new issue was key, with brokers doling them out to their favorite customers.
Eventually the music stopped, the tide went out etc. Few legitimate companies emerged from the party. We sure saw a number of companies come and go.
No. of Recommendations: 4
This thread got me reminiscing about those penny stock days. It was before day trading was possible so the Denver newspapers sold well, and they listed hundreds of penny stocks on the first page of the business section.
A friend was involved with a legitimate mining venture and his shares went from 10 cents to $2.25 in the first year. Alas, they had production problems operating at an altitude over 10,000 feet and the stock came down before he could sell many restricted shares. He did well, but in later years descended into alcoholism and suicide.
We all thought a 10 cent stock had this great upside potential. What we missed was that there was a ridiculously expensive stock which was solid and respectable…..BRK at $300 a share. I was making 30,000 a year and could have managed a few if I had not been mislead in my youthful ideas.
No. of Recommendations: 0
" We all thought a 10 cent stock had this great upside potential. What we missed was that there was a ridiculously expensive stock which was solid and respectable…..BRK at $300 a share. I was making 30,000 a year and could have managed a few if I had not been mislead in my youthful ideas."
yep, the good old days, who got you, Blinder Robinson, OTC net, First Colorado, etc ? I was very involved but retired in 1992, before the wolf of wall street, told much of the story. My SEC lawyer and several old friends got 48 months in that bust.
No. of Recommendations: 2
Thanks. Various reasons. There was a pretty good dip right before the rate doubled -- in one year -- from '79 to '80. Jimmy Carter was president from 77-81. I'm looking for a particular catalyst, if any. That steep rise is not found at any other time.
Anyway, thanks.
No. of Recommendations: 0
"Data from Crunchbase shows that Google, Microsoft, Apple, Meta, Amazon, and Nvidia have together acquired an eye-watering 875 companies."
Does the data show that all 875 were public companies? Or were many of them private?
No. of Recommendations: 6
Does the data show that all 875 were public companies? Or were many of them private?
I wondered the same thing. I am reasonably sure they included private companies.
But of course many/most private companies that are significant enough to attract the attention of the giants (and notice by Crunchbase) would probably otherwise have become public at some point, so rather than dropping the count of listed companies in this case they perhaps "merely" prevented the count from replenishing itself. In terms of reduced opportunities for public investors, and industry concentration, it amounts to the same thing.
Jim
