I don’t understand how there being essentially unlimited demand for their products that far exceeds supply and is driving up prices accordingly is somehow a bad sign for the industry?
> Now, you could raise prices to the point where you destroy demand.
You know supply and demand is like a curve right, you can find an optimal equilibrium? It’s not a cliff that you can fall off.
"Demand destruction" doesn't literally mean all demand is destroyed; it refers to the demand curve you reference. But as a sibling commenter notes, real business is rarely as clean as an econ textbook. In the real world, a supplier can contract to supply more units than they can actually produce. Their customers rely on the representation to make other related deals. And of course, the supplier can book the contracted revenue, causing investors to rely on the forward sales. They can't raise the price at that point, it's fixed in the contract. So if it turns out they physically can't deliver when the time comes, some number of the deals have to be blown up, causing related deals to blow up, etc., etc. That is the risk I was referring to.
It’s ideally modeled as a curve, but things are never that simple in real life.
I guess we'll see about that.