How do shareholders make money with stocks from the company if the company is losing profitability? [duplicate]

Question

I'm new to the stock market, and I'm still trying to see the bigger picture of what's essentially going on. As far as my knowledge goes, people buy stocks to get a share of profits from the company. But if the company is making no profit, or even has a negative profit, stock prices can still increase due to buying volume, as traders buy low after a crash and sell high after a rally.

So does the price of the stock depend on the traders/investors or how much profit that the company makes?

How can you explain the significant decrease in profit, but a rise in stock prices?

Are traders/investors just competing against each other by swing trading since companies are now cutting dividends, and no profit is coming into the market pool?

And are dividends the "profit" that the companies hand out to traders/investors as they profit? I'm just confused where the "shares of profit" from the company comes in as opposed to the actual price of the share itself.

Answer 1

So does the price of the stock depend on the traders/investors or how much profit that the company makes?

No, the price of a stock depends on the value the market places on it. You have people and companies who buy and sell stocks, the supply and demand of those stocks is what determines the price. Generally, companies that are performing well or have promise are those who are going to increase in price but there is no direct link.

Some companies pay a dividend to their shareholders and that is getting part of the profit the company makes. Other companies do not pay any dividend at all. The market prices dividends in as well, you will typically see a stock price drop by the dividend amount after the ex-dividend date (date you must hold the stock for it to pay a dividend that quarter).