[tempestn]

A company could decide to never pay a dividend, yes. But that doesn't mean the stock is worthless; you need to take the thought process further. Who ultimately controls a company? The shareholders. So, imagine a scenario where a company is profitable and seemingly valuable, but for some reason the share price is not increasing, so the shareholders are not seeing their wealth increase. In that scenario they would probably either pay a dividend or, more likely, take advantage of the profitability and low stock price to buy back stock, driving up its value.

Either way, the owners of a successful company are going to want to profit from it, which will make the shares valuable. Of course, investors know this, and so the share price tends to track current value of expected future earnings even without the company taking direct action to distribute profits.

[mullingitover]

> Who ultimately controls a company? The shareholders.

Some subset of shareholders. For example: Meta Inc. and their Class A vs B shares, GOOGL vs GOOG, etc.

[tempestn]

Sure, but whichever shareholders control the company, they ultimately want to profit from that ownership, right? So if the stock price isn't reflecting the true value of the underlying company, they're going to do something about it.

I suppose there are edge cases where they will instead attempt to profit by convincing the board to pay the CEO a trillion dollars, but even that kind of thing probably only flies if the stock price is also going up. (I wouldn't have thought to include that exception at all some years ago, but at least one salient example has proven this possible, if not likely.) So I could see a case for not trusting the valuation of companies that behave in that particular manner. Where the CEO is effectively the controlling shareholder, especially if they have shown a willingness and ability to inflate their own compensation.

[whatever1]

Also not clear what their voting power is as at any point the company can just issue infinite more shares.

[tempestn]

The existing controlling shareholders would need to support the issuing of new shares. They would only choose to dilute their own holdings if it were advantageous to do so.