US Stock Market Bigger But More Concentrated

The number of publicly listed U.S. companies has seen a dramatic decline:

“There are only 3,500, down from a peak of nearly 7,500 in 1997 and roughly 5,000 when the benchmark launched in 1974. There are many reasons to worry about a decline of public companies, but fears about the death of public equity—revived this week by Elon Musk’s potential bid to take his electric car maker Tesla private—are certainly overdone.”

The article cites reasons for this transition (bulleted for easy reading):

  1. Public companies are frequently the target of private equity firms.
  2. IPOs are in decline largely due to the incredible amount of VC capital and debt that supports startups.
  3. Founder entrepreneurs increasingly desire greater amounts of control.
  4. Today’s startup requires less physical capital to launch.
  5. To echo some of the bullets above, an abundance of capital in many shapes and forms.

While the number of publicly traded stocks is down the value of publicly traded companies in aggregate stands in excess of $30 trillion.

Fewer and fewer companies representing an ever growing portion of the economy may raise concern surrounding the “concentration of economic and political power,” but the counter would be whether or not this is worse than the lack of transparency in private markets.

private equity public companies stock market
Source: Paul J. Davies | "Why Musk’s Private Tesla Dream Shouldn’t Spook Public Markets" | 08/10/2018 | Visit