The value of a stock is based on the value of the company, but why that correlation?
Only thing I can see linking them is dividend, but that is just 3-4% Annually. What is preventing it from becoming a game of share market, like happens in crypto?
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> The value of a stock is based on the value of the company, but why that correlation?
Other way around.
Take the number of shares times the share price and you have the market cap of the company, which is what is often used to state the value of said company.
The share price is literally whatever somebody just paid for it, so that’s what it is worth. If people tomorrow decided to buy/sell Apple at $20 lower, then the market cap would drop by millions/billions.
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