Intelligence

On the death of the IPO

Reporter: Vested staff

This week’s Vested Suggested features stories that the team at Vested is reading and thinking about to begin the week.

Delisting: In 1997, there were nearly 9,000 companies listed on U.S. exchanges. Now, there is less than half that, reported The Atlantic. There are two overlapping reasons why.

Beyond the obvious expenses of listing and complying with regulations, there are the indirect costs related to managing the share price. Those costs, when thought of as risks, can either be manageable or enormous, depending on who the executive in question is. By contrast, private markets have been steadily deregulated over the past couple decades. So private assets under management now total more than $5 trillion, up from less than $1 trillion in 2000.

This might not be a huge deal for investors, but it is a terrible trend for exchanges, and potentially for the economy at large — say the exchanges. Nasdaq’s CEO, Adena Friedman, warned that if the trend continues, “job creation and economic growth could suffer, and income inequality could worsen as average investors become increasingly shut out of the most attractive offerings.”

So, two questions linger. Is an IPO still the best way to obtain liquidity in most circumstances? And does the dearth of IPO activity hold back growth and job creation to a meaningful extent?

More on Brexit: The next chapter in the never-ending drama that is Brexit is about the Northern Ireland border. “After Brexit, [the UK] will have a land border with the EU between Northern Ireland and the Republic. Both the UK and the EU want to avoid a ‘hard border’ — physical checks or infrastructure between Northern Ireland and Ireland — but cannot agree how.”

Corporations: Sears, once the largest U.S. retailer, said it has filed for bankruptcy and that it will close 142 stores this year. CNBC has a run-down of five colossally bad calls it made, the most salient of which is, “[The retailer is] run like a hedge fund.”

A different kind of token: During the past year, cannabis stocks outperformed bitcoin (and the broader market), so it’s probably time to start taking them seriously. Here are the marijuana companies to know, according to Bloomberg.

Another way to pay for things: Venmo has increased the fee for instant transfers to one percent of the total amount. “For people using Venmo as a way to process big payments quickly or get some much needed cash into their account, this is a bummer that can result in more getting scraped away by fees. Additionally, if you were trying to avoid connecting your bank account details specifically, you now have another reason pushing you to do so,” wrote Techcrunch.

From our blog: National Online Banking Day was last week. “[I]n just three short years, digital-only banks have gained a reputation for disrupting spending and saving trends as we know them, and continually pushing innovation boundaries to keep up with Millennial wants, needs and habits. But are cloud-based banks exactly what young people crave?” Read the rest for the answer.

A study has found: In a rare case of unequivocally excellent news, The Economist reported that people are including the welfare of their pets in their financial planning. “Over a third of American pet-owners say they would pay for animal-related expenses by putting less into their retirement accounts. And three-quarters of those buying a home said they would turn down an otherwise ideal property if it did not meet their animal’s needs.”