The biggest threat to financial markets in 2019 and beyond, is the dual-class voting structures gaining traction in the massive IPO’s coming to market and embodied by Lyft. It’s also the greatest threat to this nation.
If Lyft succeeds in pulling off this IPO as filed and with minimal impact to its share price, every other IPO will follow in its footsteps. If the market’s not going to ding you for doing so, what founder/CEO/head honcho wouldn’t want full control and zero oversight? Yes, zero oversight, that’s what shareholders are conceding to.
So instead of viewing this in isolation, institutional investors need to ask “How would you feel about investing in the stock market if all 500 companies in the S&P 500 had zero accountability to shareholders?” What if it were decreed that beginning tomorrow, all publicly companies will now be structured as such?
Granted, given the lack of proxy access we’re getting closer and closer to that now, but instead of frog-in-boiling-water mode, what if through the annual additions/deletions and increased market caps 50% of the value of the S&P 500 has no check on its rule?
Here’s what I predict: the economic benefits of publicly traded companies will slowly be usurped by those in charge, especially if they turn out to be marginally profitable, greatly increasing income inequality as the overseers of pension plans fritter their beneficiaries savings away in return for meaningless stakes in these new IPO’s.
Until eventually a Sanders/Warren ticket gets overwhelmingly swept into office. Is that where we really need to go?
Lyft’s IPO Shows How Founders Create Their Own Supremacy – they own only 7% of the stock!