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> The stockmarket is a comparative market where higher profitability compared to other companies is what affects stock price. Can you provide evidence for this
by karpierz 6y ago
> The stockmarket is a comparative market where higher profitability compared to other companies is what affects stock price.
Can you provide evidence for this? I was under the impression that price is dictated by long-term underlying company value. That is to say, time-discounted, risk-adjusted dividends, including buy-outs. Dividends are just paid out via stock-buybacks these days because the dividends are taxed more, despite them being functionally equivalent.
- nl 6y agoI was under the impression that price is dictated by long-term underlying company value. That is to say, time-discounted, risk-adjusted dividends, including buy-outs. It's true that price is determined by long-term value, but long-term value isn't sorely dictated by dividends. Expected price appreciation itself is a factor for growth stocks. Growth stocks include some very large companies, including Google and Facebook. Earnings is seen as an indication of future value (and future dividends if it is an income stock rather than a growth stock) https://finance.zacks.com/profits-reflect-stock-prices-8263.html https://finance.zacks.com/profits-reflect-stock-prices-8263....