Hello everyone, I am an economics student, and I am currently personally studying the mechanisms of the stock market.
I am struggling to understand the connection between reported company earnings and the price of a stock.
To the best of my understanding a quarterly improvement on reported earnings for a company will theoretically rise the price of a stock, but I want to know why?
Is it simply because people will be less confident to invest in a company with falling earnings in fear that they will go bankrupt, thus lowering demand, or is it related to the estimates of economists influencing consumer sentiment? I say this because recently poorly performing companies such as gamestop have seen huge stock price boosts, while companies reporting much more consistent and strong earnings have seen no where near that level of prosperity.
TLDR; What is the link between company earnings and stock prices?
Thank you everyone for your time.
Submitted July 04, 2022 at 11:39PM by Quick_hide_your_bum https://ift.tt/odK69FJ
