Furthermore, according to an article on the website of the Wharton business school, there has also been extreme volatility in its stock price, something which is unprecedented for such a big company.
How to explain what is going on? There are several factors that probably influenced the movements of the stock price.
Massive short squeeze
According to the Wall Street Journal, losses for short sellers since January are in excess of eight billion USD. Tesla has been one of the most shorted stocks in recent years. When there is an increase in price, short sellers may need to cover their positions. In order to do so, they need to buy shares and thus the price is pushed even higher, resulting in other short sellers needing to do the same. This drives up the price further in a vicious spiral.
Fear of missing out
Tesla reported better numbers for Q4 than was expected, although in the past it has often failed to deliver on high expectations. Q4 was also the second profitable quarter in a row. With strong numbers, some analysts raised their price targets for the company.
ESG investors
Blackrock, the world’s largest asset manager, highlighted in January that they want to focus on ESG (environmental, sustainable and governance) investing. This is very much in favour of companies like Tesla. However, this is hardly the main reason as money managed by such investors is not new money; it was already available before. Nor is Tesla’s sustainability ranking as high as it might appear.
-jk-