I don’t understand why (non-dividend paying) stocks increase in price when a company is successful; is it just because everyone expects that everyone else will find it more valuable because the company is doing better? Is the link between this type of stock and the company really just psychological? If investors are getting something other than dividends or just “ownership,” from buying this type of stock, what is it?
Even if a company pays no dividends, its price will usually reflect its "fundamentals" or "how well it's doing". This is because:
If the price is too low (relative to any metric, be it earnings, growth, etc.), then anyone can profitably launch a takeover/acquisition bid.
Example. A company has 1B shares each priced at \$1 (so market cap is \$1B), pays no dividends, and earns \$100B (profits) per year. Then one could buy up all 1B shares for \$1B, own the company entirely, and enjoy \$99B in profits in just the first year alone.
(Second and third paragraphs are identical to another answer I gave.)
Short answer is market values change when perceptions of the market valuation of the stock changes between at least one buyer and one seller in the last trade of shares.
Long analysis first watch this video by Aswath Damodaran On The ‘Dark Side Of Valuation’:
Then read his 50 page paper The Dark Side of Valuation: Firms with no Earnings, no History and no ComparablesCan Amazon.com be valued? - March 2000