Why can’t I own a piece of Lego®, Inc.?

Lego®, the company best known for plastic building blocks, is perhaps the biggest construction toy for kids and teens. The reason you can’t buy a piece of the Lego stock at Stockpile isn’t that we don’t carry it, it is that the stock isn’t for sale on the stock market. Lego is a privately-owned, family-controlled business and they aim to keep it that way.

If Lego decides to “go public” and sell their shares, the boss will suddenly have shareholders telling them what they can and can’t do with their plastic bricks. They will also have to divvy up any earnings with a ton of strangers, better known as the shareholders. For comparison, Chick-Fil-A isn’t planning to go public anytime soon either, because they don’t want shareholders telling them they have to open on Sundays. Not working on Sundays is part of the family-owned company’s religious beliefs. If you want to know some other companies who choose to stay private besides Lego and Chic-Fil-A, here’s a 2017 list of some of the largest private companies in the United States.

The Growth of Lego

Everything has been pretty awesome for Lego for the past decade. According to a Financial Times newspaper article in March of 2018, Lego has experienced a dip in sales after 13 straight years of gains in the double-digits, what their new-ish chief executive Niels Christiansen called “supernatural growth.” Now that things are slowing down, they hope to “to get back to a growth trajectory that looks like the market.” (The stock market averages 7-10%, so that’s what he means by that.)  If you’re super curious, take a look at Lego’s financial statements right here.

How will they get back on track? Christiansen says that the way they’ll do that is to “unleash the creativity” of the Lego designers – yay for Lego lovers! – and make the company less bureaucratic. In other words, the designers will have the freedom to create and not have to check in with their bosses everytime they want to do something. They’ll also focus more on digital products like Boost since the plastic bricks are having to compete with mobile phones, drones, and robots. Let’s not forget that there are lots of competitors out there trying to copy the brick since the inter-locking brick patent expired. Lego also has to decide if they’re more about theme parks and movies or new digital products. Companies need to focus to be successful. You can’t do it all!

The cool thing for Lego about not going public is that they can focus on their vision which is “getting Lego kits into the hands of children” not hitting certain financial targets to please a bunch of shareholders. Take a look at the 50-year anniversary video that shares the origin story of the company and how the name came from the Danish phrase “leg godt” which means “play well.”

If you really want to invest in Lego, the best way to do it is to buy their products. If you’re looking to get a toymaker in your portfolio, you can invest in a competitor like Mattel, Hasbro or Disney right here.

 

 

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/meghan Gardler