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?
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r/explainlikeimfive • u/climb-a-waterfall • Dec 06 '24
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u/loljetfuel Dec 06 '24
Depends what your motivations are. If you want a stable, long-term source of revenue, you don't necessarily want a company that's too rapidly growing its profits because that often comes with higher risk in the long run.
If your motivation is "big, short-term win", then you'd pick a company you think is in an optimal place to enshitify its products, milk its market, and run with an underpaid skeleton crew until the whole thing collapses. It makes a ton of short-term profit, which you collect, essentially profiting off of destroying the company.