ThredUp, the clothing-consignment company, announced Tuesday that it’s dual listing its stock on the Long Term Stock Exchange, or LTSE, a national securities exchange designed to promote sustainable principles and a long-term focus among investors and businesses.
“This is another indication of ThredUp’s commitment to the long term,” CEO James Reinhart told CNBC. “We’re here to make a difference. Not for two or three years, but for 20, 40, 50 [years].”
It’s just the second company currently listed with LTSE. Reinhart says he first read about the market a few years ago and started talks to list on the exchange over the past two years.
LTSE was founded by tech entrepreneur Eric Ries in 2016, but it took several years to get up and running. For a company to list with LTSE, it has to outline a set of principles to ensure that it will abide by certain long-term commitments, such as environmental improvements or corporate-governance standards.
In ThredUp’s LTSE listing, for instance, the company calls “the environment” one of its “most important stakeholders.”
LTSE launched in a bid to address criticism that companies have been maximizing profits for shareholders above all else.
The new stock exchange wants to “reverse the epidemic of short-term thinking,” Ries told CNBC. “The incentives that we’ve created around finance, around the capital market, really make it difficult for companies to do the right thing.”
Ries joins others, including billionaire investor Warren Buffett and JPMorgan Chase CEO Jamie Dimon, who have argued that such short-term thinking is hurting companies.
“People are going to realize that the definition of profit that we have been using the last 25 years is wrong, and that what it means to make a profit is to maximize human flourishing,” Ries said.
For all its lofty ambitions, the path was never going to be easy for an exchange like LTSE — and it certainly hasn’t been so far. There are more than a dozen stock exchanges in the U.S., but the majority of all trading occurs on the New York Stock Exchange and the Nasdaq Stock Market, making it difficult for alternatives to gain traction.
LTSE first gained approval from the U.S. Securities and Exchange Commission in 2019, and it started trading in September 2020. The market struggled to pick up steam, but it saw a distinct boost in 2021 when software company Asana listed with it.
LTSE functions similarly to other exchanges, with the same ticker symbol across all trading platforms. A company’s opening and closing price will be established the same way it has been since going public, typically giving weight to the primary exchange it’s on.
Like any public company, those that list on the LTSE still report quarterly earnings, but the exchange’s standards are designed so that the earnings reports are meant to give context to the long-term narrative of the listed company.
A company that’s dual listed on LTSE might list concurrently with an initial public offering or, like ThredUp, might be a public company that’s traded elsewhere initially and chooses to meet LTSE’s standards for listing. ThredUp first went public in March 2021 and is currently listed with Nasdaq.
Its LTSE announcement arrives at a tricky time, though, given an increasingly difficult retail environment. For 2022, the company reported a loss of $92.3 million, or 92 cents per share.
But Reinhart noted those industry challenges speak to ThredUp’s commitment to long-term, forward-looking policies. “It’s always been easier to do these things later,” he said. “Sometimes companies need to lead and show people it can be done.”
“It would have been really easy [for Reinhart] to call it off or to postpone because it’s a tough time,” Ries added, saying the dual listing lays a foundation “for future prosperity at a time when the natural human impulse is to be afraid.”
One other company, the communication platform Twilio, did list on LTSE but it delisted in 2022, citing cost concerns.
For its part, LTSE said it will continue to eye the long game from here.
“We’re not in a rush to make predictions about how [LTSE] is going to take over the world overnight, because ultimately, we only want the very best companies,” Ries said. “For us, this is about creating a real club of the best of the best to show that there’s a new way forward.”
(With inputs from CNBC)