In late 2022, while having coffee with a friend who works as a banker, I realized for the first time that something was going on in the public markets. He was grumbling, half amused, that there were no longer any IPO roadshows on his schedule. His bank used to reserve conference rooms months in advance, but now they were empty. He claimed that the pipeline had recently become thinner. These things usually happen slowly at first, then all of a sudden.
I think about that conversation a lot. On a recent visit, I strolled past the New York Stock Exchange and noticed that the building still had the same appearance, complete with flags, morning television producers fumbling with cables on the sidewalk, and security guards waving at guests in suits. However, the data reveals a more subdued narrative. There used to be about 8,000 publicly traded companies in the US. Currently, the figure is closer to 4,300. Not in a crash, but in a gradual shift toward private ownership, half the market has vanished.
People I talk to seem to feel that this isn’t a blip. It feels structural, potentially long-lasting, changing who is entitled to share in the wealth generated by contemporary business. By now, businesses have practiced their reasons for remaining private. Burdens of compliance. pressure on quarterly earnings. Letters demanding board seats were delivered by activist investors. regulations requiring a local manufacturer to publish the same level of supply-chain information as a multinational software company. These grievances are not brand-new. But collectively, they’ve attained a sort of critical mass.
The sheer amount of private capital available has changed more significantly. Twenty years ago, a business that grew beyond a certain size would simply run out of private funding. While wealthy families, pension funds, and endowments were willing to support early-stage wagers, writing a billion-dollar check typically required going public. That is no longer the case. The payment company Stripe has raised tens of billions of dollars in private and doesn’t seem to be in a rush to list. Without exchanging a single share, SpaceX is worth more than $400 billion. Since the 1860s, Cargill has maintained its privacy, and it doesn’t seem to see any reason to do so now.
From a journalist’s perspective, it’s difficult to ignore the winners and losers. The founders prevail. As secondary markets develop and allow them to sell stakes without an IPO, early employees with options ultimately prevail. Private equity firms achieve significant success. More and more, the retail investor—the person with a retirement account who wants to purchase a share of the next Apple—does not. The most generous growth years are typically over by the time these businesses are accessible to small investors. Those in attendance have already received the 100x returns in private.
This has been particularly felt in Europe. Recently, there have been several delistings in Amsterdam, and Brussels’ public market has shrunk to almost nothing. For years, the London Stock Exchange has openly questioned why its biggest names continue to list in New York or not at all. Chinese tech companies that previously aspired to list on the Nasdaq are now pursuing private rounds financed by state-backed capital or Hong Kong dual-tracks. The actual geography of capital feels different now than it did ten years ago.
Naturally, there is a counterargument. Some economists contend that the public market’s decline is merely a reflection of how contemporary companies are constructed, since software companies that rely heavily on intangibles don’t require the capital-intensive funding structures that public markets were designed to support. Perhaps. It’s possible that the true story is more about a subtle mismatch between today’s businesses and yesterday’s exchanges than it is about regulatory overreach.
Even so, there is something unsettling about a market where the most promising companies are purposefully kept out of the reach of regular investors. Depending on who is in charge, regulators have been raising flags for years with varying degrees of enthusiasm. It’s still unclear if anyone actually has a plan to stop the trend or if doing so would be the best course of action.
The drift continues for the time being. Silently. Not very spectacular. Additionally, most outstanding companies now choose to completely avoid the trading floor, which was once the location where businesses grew into something greater than themselves.