CNN: The stock market is shrinking and Jamie Dimon is worried [View all]
The number of publicly traded companies in the United States is shrinking. Jamie Dimon, one of the world’s most influential business leaders, is worried. At their peak in 1996, there were 7,300 publicly traded companies in the US. Today there are about 4,300.
It’s not that America has 40% fewer companies than it did 30 years ago, it’s that companies are increasingly staying private, largely outside the scrutiny of the public eye. “The total should have grown dramatically, not shrunk,” wrote Dimon, CEO of JPMorgan Chase, in his annual shareholder letter on Monday.
The PE boom: The shrinking public market has private equity to blame — funds that pool money from investors to acquire or invest in companies.
When a PE fund buys a public company, it takes that company private. When it buys a company that isn’t yet public, it is kept that way. That means these funds have complete control over their companies and can encourage them to boost their profits as quickly as possible for a quick sale later down the line.
The number of private companies in the US backed by PE firms has grown from 1,900 to 11,200 over the last two decades, according to JPMorgan data.
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https://www.cnn.com/2024/04/09/investing/premarket-stocks-trading/index.html
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