Random walk theory is a financial concept that suggests stock prices move in a random and unpredictable manner. According to this theory, past price movements do not influence future price changes, making it difficult to predict market trends. This idea is often used to support the notion that it is challenging to outperform the market consistently. The theory is closely related to the Efficient Market Hypothesis, which posits that all available information is already reflected in stock prices. As a result, investors cannot achieve higher returns without taking on additional risk, reinforcing the idea that stock price movements are largely random.