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Price also gets corrected because people are looking at what the company and the stock will be worth in *different future points in time*. There are always investors who are looking to get results in a day, a month, a year, 2 years, 10 years, 30 years.
When Martha Stewart was in her worst trouble, the price went to like 20, but because her short-term prospects were horrible, her long-term prospects were not; and when she got out and it looked like her reknown would be greater than ever, the stock went back up to 40. If you were playing the long term, and really amazingly prescient, you might have figured that out when things looked to be at their worst.
In fact I've heard some people have systems where they buy stock that appears to be at its very worst point. Figuring out which ones are Martha Stewarts (where you double your money in 6 months), and which ones are Enrons (where you lose it all), is beyond me, but there are people who do it.
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