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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Because stocks are basically a portion of the company. The total of stocks combined represents the entirety of the company.
If your company is worth 100 dollars and has 1000 shares, each share is worth 10 cents.
If the company value goes up to 200, and you still have 1000 shares, each share is now worth 20 cents.
Companies can’t just “print out stocks”, the amount of stock is fixed (kind of) which is why the value fluctuates with the price to reflect its actual value. This is also why if you own 51% of a company’s stock, you own said company because you literally own 51% of the company.
This is why crypto is often seen as a scam, there is technically no “limit” to the amount of crypto, its tied essentially to nothing. Thus its value is driven entirely by how much people think its worth.
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