1) A company’s share price is the equilibrium point where Active Investors with a fair value estimate greater than the current share price is equal to the number of shares available for active investors to purchase.
$TSLA
A) There was uncertainty where Model 3 demand would land after the initial reservation orders were fulfilled and US EV credit expired. Deliveries in Q3 & Q4 post clearing the backlog have now significantly reduced uncertainty on this.
As a result investors adjusted their view on how easy it will be for ICE OEMs to catch up on EV tech.
A) Changes to original investor’s fundamental fair value estimates.
B) New investors getting involved as uncertainty reduced and
C) A 17m reduction in shares available for longs to buy.
In the short term price changes are also heavily accelerated by Options delta hedging.