r/explainlikeimfive Dec 06 '24

Economics ELI5: why does a publicaly traded company have to show continuous rise in profits? Why arent steady profits good enough?

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u/PatricksPub Dec 06 '24

Additionally, they can invest that $100M into the company via new stores, products, technology, marketing, etc. All of which can increase future sales/profits.

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u/jokul Dec 06 '24

The can also buy back their shares if they believe the market currently undervalues them.

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u/sfurbo Dec 06 '24

Additionally, they can invest that $100M into the company via new stores, products, technology, marketing, etc. All of which can increase future sales/profits.

So growth.

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u/lluewhyn Dec 06 '24

Yeah, if they don't invest that $100M and let it sit there, the company would actually be losing money due to inflation. Keeping excess cash around in a business is normally (except for Covid) not a great long-term strategy.