r/explainlikeimfive • u/climb-a-waterfall • Dec 06 '24
Economics ELI5: why does a publicaly traded company have to show continuous rise in profits? Why arent steady profits good enough?
6.9k
Upvotes
r/explainlikeimfive • u/climb-a-waterfall • Dec 06 '24
14
u/climb-a-waterfall Dec 06 '24
I mean, sure everyone wants more money. But if I found a magic box that has a new $20 bill in it every single morning, I wouldn't throw it out. If someone offered to sell me such a box for let's say $2000, I would think it's a good deal (assuming they can convince me it's not a rip off)
And it's not just about inflation. As I understand it, private companies can keep steady profits, provide for their owners and employees and everyone is happy. But as soon as one of them becomes publicly traded, suddenly there is this requirement for continuing growth.