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Description: Have you ever wondered how an Uber ride can be so much cheaper than a taxi? Or how Netflix has fostered a creative war that seems like a boon for binge-watching? Or why Amazon really doesn’t make all that much money despite its massive footprint in our lives? These companies, and others such as Spotify, Pinterest, and Beyond Meat, have benefited from an investor philosophy that essentially says don’t worry about profit right now. Dominate your field and down the road the investment will pay off. But decreases in stock prices of several of these “non profits” may indicate that the party is over for them, and perhaps for us too.

Date:  February 4, 2022

Source:  financialpost.com

 Link: https://financialpost.com/investing/investing-pro/investors-have-subsidized-our-uber-rides-spotify-tunes-and-netflix-bingeing-but-maybe-not-for-much-longer

Discussion points:

1) Have you and your fellow students benefited from any of these investor subsidies? Which are the most popular??

2) What forces may be prompting investors to move away from the ‘capital gain some day’ dream and driving down the share prices of the companies named in the article?

3) The inset box “IPOs Can be a Mixed Brew” on page 11-6 of Wiley’s Financial Accounting: Tools for Business Decision-Making, deals with the notion of an IPO, or Initial Public Offering of a company’s shares. As a class activity, look up the initial share price of the various companies named in the article, and then compare this IPO price to the current trading price of the shares. Are there any trends?

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