Hey folks!
So one aspect of the stock market has been particularly confusing to me, that is the correlation between company's net income and their stock price.
To me it would be logical that if a company is making more money year by year the stock will go up.
But there actually is a hefty amount of companies that despite their earnings declining or staying flat, their stock price has almost doubled with the same amount of income, within the same time period.
One example of such a company would be McDonalds - an establishment that has had gotten their net income back to flat from about 4/5 years ago, despite their stock price almost doubling since then (revenue also flat)
One smaller reason for it could be inflation, but even a very generous rounding of 2% a year still is nowhere close to the gains that MCD's stock price would suggest.
What am I missing? Thanks in advance
Submitted May 14, 2021 at 08:17PM by NicKthePsyhO https://ift.tt/3eQ3P8O
