• olmec
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    3 months ago

    Stock price is really just a present value of future expected earnings. Buying Coke for $100 is because you think the earnings of that share in the future is worth $100. So yes, if the company makes an announcement that it isn’t as profitable, the price will go down, because buyers won’t want to pay the same for an asset that is returns less than it was expedited to.

    Yes, there are complications. Shorts, futures, non dividend yielding shares, and more make it more muddied. At the end of it though, the future expected earnings are what is being bought and sold.