Nasdaq Is Raising Alarm Bells in Washington About the Shrinking Roster of U.S. Stocks
CEO sees government red tape as an obstacle to public listings
Adena Friedman frets that average investors are missing out
Nasdaq Inc. is spreading the word in Washington about what it views as a dire problem: the dwindling number of stocks in the U.S.
Fewer companies are choosing to have publicly traded shares, instead of tapping into the plentiful private capital available to startups. Uber Technologies Inc. has for years put off an initial public offering, so the ride-hailing company will be worth vastly more — possibly $120 billion, according to a Wall Street Journal report on Tuesday — when it finally does sell shares.
Staying private has blocked average investors from stashing money in these corporations, missing out on their huge growth, Nasdaq Chief Executive Officer Adena Friedman said Tuesday at Bloomberg’s “Sooner Than You Think” event in Brooklyn. She believes overly burdensome regulations are partly to blame.
“There are more gates that have been put in place, specifically put in place by the government, that have made it harder for companies to be in public markets,” Friedman said. The goal is to make an IPO “less scary, to make it so companies look at it as something that they really want and have as their next phase in life.” Addressing this and other problems won’t be easy, but Nasdaq is “taking them piece by piece, working in Washington,” she added.
The CEO also wants to encourage long-term thinking among investors, which echoes President Donald Trump’s recent tweet that suggested companies shift to reporting financial results semi-annually, not every three months.
“The quarterly earnings cycle is still something that is hard to change,” Friedman said. “It’s hard to change that entire mindset in the U.S., but I do believe there is a way to make it less onerous for the companies.”
She was joined on stage by Vlad Tenev, the co-founder of Robinhood Markets Inc., which offers free stock trading to customers. His company is currently private, but he does want to change that eventually. Because Robinhood is a brokerage, “it will be positive for our brand for customers to one day buy Robinhood using Robinhood,” he said. But he acknowledged that becoming a publicly traded company isn’t an easy decision. “There are trade-offs. Companies have to decide whether they’re ready to go public.”
By Claire Ballentine and Tom Giles