How do companies entice small market investors

This has prompted strategy adjustments. In addition to spending time communicating with analysts, whose “buy” or “sell” ratings on the stock could drive its price up, Mr. Schreiber said, he interviewed retail investors on popular podcasts, websites and YouTube programs Has made a point of doing.

“I think they are, today, far more influential, and much more in terms of power to buy or sell stocks than the mighty Goldman Sachs,” Mr. Schreiber said. “And we have seen in our stock.”

Academic research suggests that in the long term, it can be a competitive advantage for a company to have a patient base of investors who understand and follow their strategy. Mr. Cunningham of George Washington University Law School said that such a stable foundation would make it possible for executives to focus on long-term strategic goals, rather than meeting the short-term metrics often set by Wall Street analysts. Is focused on by analysts.

Take the Amazon. It generated many times more profits than its street price and despite unexpected profits and widespread skepticism from Wall Street. Individual shareholders who bought Amazon’s stock in the eyes of founder Jeff Bezos, and saw no problem with Amazon recycling their huge cash flow into the company rather than paying dividends. Many of those shareholders are now happy; Someone bought $ 1,000 worth of Amazon shares in early 2000 that would be sitting at more than $ 43,000 today.

Tesla shares have also exploded in recent years – a victory for the base of its cult followers, who believed in the company’s prospects despite years of losses. Tesla shares have risen by more than 1,300 percent over the past five years, generating $ 640 billion in funding on the market.

While some companies are following the loyalty of small shareholders, others are chasing their money. Companies whose shares have gained momentum during January’s “meme stock” boom have taken advantage of the demand to issue new shares, turning trading enthusiasm for the company into real cash. (Previously issued shares that are bought and sold in the open market do not generate any new money for the companies themselves.)

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