Is issuing shares for financing realistic for a start-up

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Reference no: EM133715879

Purpose:

The following article will familiarize you with the role of stock markets in financing businesses. The article lists 16 companies, some well-known to us, that are unprofitable yet are able to issue shares to raise capital for their company.

We understand how difficult it is for small companies to get the financing they need to create new products and services, and also understand the link between profitability, returns and rewards to shareholders. Are the stock markets (American or Canadian) the best forum to raise funds?

Instructions:

1. Read the article "16 Firms Worth Billions Despite Losing Money."

Discussion terms:

a) As of August 2017, Twitter (TWTR - N) has a market capitalization (or stock market value) of 12.49 billion but as yet, as a company to be profitable. Is the stock market "rewarding" Twitter shareholders for Twitter lack of profitability?

b) Every day in the nightly newscasts, the report of the stock market indexes are posted and the changes in the value of the stock market commented. Are stock markets a proper indicator on the health of corporations? Are the stock markets a proper economic indicator?

-> Is issuing shares for financing still a proper financing tool?

-> Is issuing shares for financing realistic for a start-up or small company?

Reference no: EM133715879

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