It’s a bit like being an influencer
Social media influencers are those who influence others through their social media accounts. They were not always influential, in fact they probably started from just a few followers. What made these people more influential over others is all of us, by following them and their accounts. Once one becomes an influencer, brands notice it and start to gain interest in them showcasing their products in return for money. Slowly, the original influencer becomes a mix-and-match of promotions of various brands, and their accounts become somewhat dictated by their sponsors. Public companies are similar - they started off with a great idea which really took off. It was so successful, that the company met certain standards to become public, and its shares opened up to all shareholders who can afford a piece of it. This, naturally, changes the way the company works, as these shareholders now also hold the right to vote on matters regarding the company.
What are public companies?
The “I want a piece of you” of the stock market, public companies are corporations which are traded by general shareholders on at least one stock exchange. The shareholders are equity owners, and are literally anyone who bought a share in the company. With the shares, the shareholders also gain access to the decision-making progress of their now-partially-owned companies, taking away power from the owners and management. Going public also means dealing with tons of obligations. In return, they get a pretty sweet deal on just how much capital they can raise and the additional revenue they can gain through creating and selling new shares.
Once upon a time…
Public companies were probably private companies. Then, they worked their way up to meet a bunch of regulatory requirements to become public, and therefore be free to raise more capital. By that, we mean raise hundreds of millions (and even billions!) for growth through capital fundraising rounds. This benefit comes with much responsibility. As much as it kind of sucks for a company to have to fulfill its many regulatory obligations, this also means that they can have to be more transparent, and shareholders feel safer with their investments. On top of that, this also means more corporate responsibility and fairer treatment of employees! Yay!
Buy, sell, purchase, repeat.
A huge advantage of a publicly traded company is that their shares are easily transferable. As it is traded on the stock markets, investors can buy, sell, and repurchase without too much hassle. These investors, as well as the owners of the corporation, are also much better off than ones in a private corporation. While private corporations rely on few large-sums investors, public corporations do not put all their eggs in such a small basket. In other words, they are better protected from monetary loss, as both the owners and the investors are not directly affected by each others’ performances.
Why will your future self thank you?
These are the BIG CORPORATIONS. Companies that are publicly traded are often also the ones publicly discussed. Whether we are talking about corporate responsibility, scandals, or crazy jumps in market shares, these are the companies which are in the public eye. These are also, likely, many of the companies that you consciously or subconsciously use in your daily life. It’s good to know that they are publicly shared since it also means that they could be partially owned by you! All thanks to fractional shares...
- Mergers and acquisitions are the most common causes of death for a company (not bankruptcy!).
- Average life expectancy of a public company is 10 years. Cats live longer.
- 94% of the world's population recognizes the Coca Cola’s logo. And this is relevant because Coca Cola is an example of a public company.