Think about what happens to the stock price of a company once it stops growing. It falls through the floor. It could be making enough money to pay all of its employees, and making the world a better place, but if it doesn't grow, then if it has already gone public, the stock price sinks, and all of the employees who hold stock lose a lot of money. If it hasn't gone public, then the VC's get really upset. An example of such a company was Cygnus Support, which was in no danger of going out of business, and it was supporting a hundred or so engineers and their families, which were producing high quality open source code (such as GCC, gdb, etc.) so it was certainly making the world a better place. But it was considered a failure because it didn't give the VC's a lucrative exit. That's growthism. Fortunately for Cygnus's VC's, finally Cygnus got bought by Red Hat many years later.
But Red Hat is going to end up in a similar boat; as a public company, if it can't figure out a way to sustain an significant growth every year, forever, the stock price will get punished. And of course, the problem is that companies can't produce a sustained compounded growth forever, because sooner or later compounded growth will cause the company's required revenues to exceed the world's GDP. So the trick is to stay on the rocket ship as long as you can, and then sell the stock to a greater fool before it tips back towards earth. And that's growthism, too....
> Think about what happens to the stock price of a company once it stops growing. It falls through the floor.
I don't entirely agree. Companies which can earn stable profits and distribute those as dividends remain healthy stocks. Their stock prices might remain flat, but with dividend payments there's always a natural floor at which a stock will fall to, and no one's really holding them to make a profit on the sale of the stock (the stock price is more of a safeguard in case the companies cut dividends or you decide to liquidate to move your money). The key is finding companies which can sustain profits and those are often businesses with pricing power to keep up with inflation and competition. Here's a great blog:
His posts go back for years, and he's very focused on researching companies which have paid strong dividends for years/decades. It's an enlightening blog, especially after being surrounded by tech companies which rarely pay dividends and have stock prices based on growth potential (but Oracle, Intel, MS, etc. have transitioned to dividend paying companies).
I think you do not understand how stocks work. A stock in a stable, cash-generating company would never "fall to the floor" when it stops growing. Its stock would simply fall to its present day value. That inflated stock price you saw fall was based on future earnings. We then classify that stock as a "value stock" which means it has limited growth but maintains a stable price and perhaps yields a nice cash dividend that is paid from the operating profits. The company should still seek to enhance efficiency and productivity as well as keep its products/services fresh and relevant but growth would be modest at best. These companies are plentiful in the stock market and very important to any stock investors portfolio.
Granted your world view of stocks is probably limited to top tier tech stocks which have huge growth potentials (apple, amazon, google) and have huge price swings based on the latest tech conference or article.
Of course the stock will get punished, since the price of a stock is mostly based on future earnings. If a company had a growth trajectory of A and now it's a lower trajectory of B, the stock price should drop.
So then isn't the sustainable option to grow until you can, then leave the last stages of "grow, crash, burn" to some fool and then start the exact same company but with a different name (i.e. RougeChapeau) and recapture your old market by doing exactly what you used to do, but now you're in a growth position compared to your old self that crashed and burned?
But Red Hat is going to end up in a similar boat; as a public company, if it can't figure out a way to sustain an significant growth every year, forever, the stock price will get punished. And of course, the problem is that companies can't produce a sustained compounded growth forever, because sooner or later compounded growth will cause the company's required revenues to exceed the world's GDP. So the trick is to stay on the rocket ship as long as you can, and then sell the stock to a greater fool before it tips back towards earth. And that's growthism, too....