- Capitalism will become more "compassionate" as a result of the coronavirus pandemic, billionaire entrepreneur Mark Cuban said Wednesday.
- "It can't just be about shareholders. In fact, you have to put employees ahead of shareholders," Cuban said on CNBC's "Closing Bell."
Capitalism will become more "compassionate" as a result of the coronavirus pandemic, billionaire entrepreneur Mark Cuban said Wednesday.
"I think capitalism is going to become a lot smarter and a lot more compassionate because of what we're going through," Cuban said on CNBC's "Closing Bell."
Cuban, owner of the NBA's Dallas Mavericks, said he thinks executives will now recognize that they need to put employees first. The consequences of not doing so will be greater now than it was in the aftermath of the financial crisis, when social media was still in its nascent stage, Cuban said.
"It can't just be about shareholders," Cuban said. "In fact, you have to put employees ahead of shareholders."
Shareholders will ultimately reward the companies that do so by awarding their stock a higher multiple, Cuban contended.
Cuban said investors may say, "I'll give company A, B, or C a higher P/E ratio when I buy the stock as a reflection of the fact that they understand the longer term and it's not just about this quarter or this year."
The financial crisis more than a decade ago contributed to a different social and political landscape, helping give rise to populist movements in the U.S. and abroad. But Cuban said he thought corporate America's response to the economic crisis from the COVID-19 outbreak will be different.
"Everybody felt the risk of what was happening politically, and the threats, seeing the same surveys about Gen Z and millennials liking socialism as much as they liked capitalism," Cuban said. "And I think any smart CEO recognizes that was a threat."
Cuban has been outspoken in recent weeks as the coronavirus pandemic intensified.
He's also said any company that receives government aid to weather the pandemic should be prevented from buying back stock.
Cuban also said Wednesday he was skeptical of the stock market's recent rally as Wall Street has grown more optimistic toward the coronavirus. "I'm surprised. I think this is kind of buy the rumor and potentially we sell the news when reality sets in," Cuban said.
Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank," on which Mark Cuban is a co-host.