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Matt Levine

Public Markets Don’t Matter Like They Used To

Also Kodak, exploiting Robinhood and hiring activists.

Not that long ago, the stock market was a place where companies raised money to invest in their businesses. If you were a company and you needed money to build a factory, you could sell stock to investors. Investors would give you the money in the hopes that the factory would be profitable and you’d have more money later on, which you could give back to the shareholders in the form of dividends.

Now the stock market is a place where companies return money to shareholders. If you are a company and you have a factory, it probably makes money, and you use the money to buy back stock from your shareholders. Investors trade your stock with each other on the stock exchange in the hope that your factory will be profitable and you’ll buy back their stock. You don’t sell stock to raise money; you buy stock, to do something with your money.