Does a stock's price reflect how much the company is making?

Question

I have read a couple articles like How Is a Company's Stock Price and Market Capitalization Determined?, and I am a little confused.

Looking a this stock: Metrospaces, Inc. (MSPC)

• They have 5.6B shares outstanding

• On 2/14/2018 they closed at 0.0001 meaning 5.6B X 0.0001 = $560,000 company value

• On 3/07/2018 they closed at 0.0025 meaning 5.6B X 0.0025 = $14,000,000 company value

If I have read the articles correctly would that mean that the value of the company on 2/14 was $560,000 and then in 21 days their value went up to $14,000,000 and then back down to $6,160,000 today?

Do these numbers have anything to do with how much the company is actually making or is this what they call "pumpers"?

Answer 1

Stock price has very little to do with current income and a lot to do with future cash flow. Whether or not the increase was due to a "pump and dump" scheme is not discernable. Most likely the company is actually worthless, but a more in-depth analysis of book value (assets - liabilities) and future earning potential would be needed to properly evaluate the stock.

Answer 2

In a word, No, not really. Stock price reflects how many people WANT to own that stock, in relation to how many shares are available, nothing more. Now, the desire to own that stock may be INFLUENCED by any number of factors, including current earnings and potential future earnings.

Answer 3

BIG NO. In the short term, stock market does not reflect company's financial performance, rather, it reflects speculative activity. These speculation could be driven by news (Trump tariffs, FED decision) or by corporate action (Berkshire Hathaway buyback, Coca Cola dividend)

While short term volatility has no underlying meaning for company's financial performance, over long run, it's different story. Try to look at Apple's share price from 2013 to 2018, and examine its earnings each year, then you will understand how stock market prices move in tandem with company earnings.

In 2013, Apple's share price hovered at 56 level, now it skyrockets to 150 level. This movement is in the same direction with its earnings, which has almost doubled in the same period.