Linked to the size of companies, the development stage of a firm is a key characteristic that impacts upon stock market expectations. There are 4 stages of development: Startup, Growth, Maturity and Decline.
Much like with size, the earlier a company is in the development cycle, the more volatile it is as an investment. However, when a company reaches the decline phase, the risk of losing money is also increased.
On the stock market, it’s quite unusual to be able to invest in startup companies as they usually get funding from private investors. Most companies list on the stock market during the growth phase.
Companies in the decline phase are coming to the end of their business life. They tend to be characterized by sharp declines in the stock price, a long history, and a lack of business development.
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