ICYMI: Small-cap stock exchanges would be a boon to small business, workers, and main street investors
Nov 22 2021
MADISONVILLE, La. – Sen. John Kennedy (R-La.) authored this op-ed for Fox Business. Below are key excerpts from the piece, which outlines the advantages that creating dedicated stock exchanges for smaller companies would bring for workers, main street investors and small businesses themselves.
“Small companies today face a problem almost as unknown as some of the firms themselves—the exchanges designed to take them public often keep them in the shadows. Currently, these more modest firms—known as small-caps—have to list on the same stock exchanges as the Fortune 500 when they go public, so bigger competitors often eclipse them when they vie for investor attention.
“The Main Street Growth Act would make stock exchanges better at doing what they do best by creating venture exchanges specifically for smaller companies and the people looking to invest in them. The option of hosting smaller firms on their own exchanges would not just help small businesses succeed alongside their giant counterparts, it would be a boon to main street investors, America’s economy, and workers as well.”
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“Small-cap stocks on the NYSE simply don’t get as much exposure to investors in existing exchanges because companies with the highest market capitalization—the total value of all of a company’s stocks—have greater name ID. A young business like the shoe and clothing company Allbirds isn’t a household name like Disney, Netflix, or Nike are. Investors aren’t just less likely to buy and sell small-cap stocks—they’re less likely to even know the smaller folks, and the big growth opportunities they might offer, exist at all.
“Because the current arrangement makes going public unattractive for many small-caps, those companies either wait longer to offer their stocks or never open themselves to public investment at all. Too often, firms forgo the significant growth opportunities that come from raising capital on stock exchanges. Not long ago, Blockbuster was still the king of video rentals. In 2002, Netflix’s initial public offering on Nasdaq raised $82.5 million. Now, no one starts their weekend with a DVD rental from their local Blockbuster, but people around the globe are more likely to stream Netflix than take a daily vitamin.
“But how many opportunities like Netflix never make it onto investors’ radar? Venture exchanges offer greater visibility that would encourage more budding businesses to sell their stocks to the public and therein raise more capital. That capital enables at least two things that drive the American economy: It fuels innovation and allows businesses to expand their operations. Broader operations create more jobs.”
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“As a result, allowing small-caps to court investors looking for exactly what they have to offer would be a win-win-win situation for the American economy, for small businesses, for investors, and for workers.”
The op-ed is available here.