If You Like TSLA at $140, you'll LOVE it at $200: The NUMI Plant Advantage and Stock Market Predictions

Back in February I spoke of the "short squeeze" on Tesla stock, which had been kind of bumping along aimlessly at $34 per share. I predicted then that the short squeeze could press Tesla stock (TSLA) to ridiculous highs having no bearing on any conceivable valuation of the company and this could be particularly virulent in tech and growth stocks. I mentioned I would probably see that topping out at something truly stupid, like $140 a share this summer.

Today is August 5, 2013 and TSLA opened at $140.01 per share. At the moment it is trading at $142.

In our shop at the momemnt, an early arrival for the Electric Vehicle Conversion Convention, is Al Gajda and his son Paul who are installing the 80 CA180FI cells making up his 46kWh battery pack - probably enough for a 130-140 mile range. Al is notoriously thrifty, making switches from kitchen parts and batteries from remaindered A123 cells and cardboard boxes. Suddenly, he wants an 11 inch Netgain, Soliton1, 800 watt DC to DC converter and 80 of our largest and best cells. What gives?

Apparently he's been watching regularly. And has done rather well in TSLA the past few months. So his dream car, not precisely a Model S, is coming together in a 1939 Dodge Brothers pickup truck which he drove to Sunday dinner at the Rickard house last night - with son Paul navigating. Said the transmission was a little loud. I suggested that might be because the engine was a little quiet and told him the story of the Speedster hubcap that nearly had me institutionalized before I simply removed all hub caps from the car. You hear things you never heard before.

Tesla reports on August 7th, this Wednesday. I think they are going to report fewer sales in the 2nd quarter than the 1st, no mention of backlog, and probably less profitability as they raised nearly a billion dollars in a secondary offering and are no doubt feverishly trying to spend it. I would guess there will be a great hue and cry from the ever ready and ever critical crows on the fence predicting dire outcomes for anyone involved with Tesla.

Then of course there is the concept of buy on the rumor and sell on the news. I think the stock will climb today, tomorrow, and Wednesday. Thursday morning it will go up or go down. I expect an effort by Elon to counter the very slight decrease in production numbers with great talk of diminishing wait times, more efficient production, and then some exciting announcement about superchargers or battery swaps or the battery swap hair club for men or something to counter the negatives.

Thursday morning it will either climb sharply or fall sharply. Not certain which.

So I'll sell Wednesday afternoon. Probably wait until Friday to buy back in, either higher or lower, matters not to me, but I would bet lower. If lower, it will likely recover over the next couple of weeks. The car is a phenomenon quite beyond the car it is, the company is having a huge impact quite beyond the company that it is, and I think it will become a fad stock quite beyond the shorts - more like AOL of years past or Google. Trees don't grow to the sky but these things have to run their course and there's a year or so of TSLA mania yet to play out.

I was VERY impressed with the execution on the purchase of my Model S. They made it VERY easy to order. VERY easy to pay for the car logistically. VERY easy to pick it up in St. Louis. IT was six weeks and four days from order entry to driving it away. But it was a $107K ticket and the number of people in that position for a car these days is somewhat limited. The low hanging fruit thing. But as the reviews pile in, it becomes clear that if you are a player in tech space and DON'T have a Model S, you must be having trouble or something. It's going to become REQUIRED DRESS CODE in Silicon Valley if you want to appear successful and on the go.

Conversely, if that's your claim, anyone will look askance if you aren't driving one. IT is now a critical fashion statement in a lot of circles. I wouldn't be caught DEAD hosting an EVCCON without one at this point.

I guess I see $200 by the end of the year. But great noise this week about the "miss". And you'll see headlines like "Reality CHeck for Tesla", "Is Tesla just a lightning Flash in the Pan?", and much howling from the shorts that they were right all along. On the six week time frame all that will fade in the face of dozens of "me too" announcements from other automakers who haven't missed the import of all of this at all. I would even entertain acquisition rumors complete with SEKERT MEETINS - NO GURLZ ALLOWD.

Elon meanwhile is oddly confident, probably the result of the very successful secondary offering no doubt and actually gazing elsewhere - hypertubes and Tesla three years hence. Meaning he doesn't feel he has to focus on the door handles any longer or supplier issues. Suppliers are onboard now - hard. THey are all struggling to appear "more supplier than thou" in all directions. Their snobbery and condecension from the era when A123, Fisker, Think, and AZD were all going bankrupt, terrorizing suppliers everywhere, is gone.

And what is Tesla's most crucial asset and the most brilliant think Musk has accomplished? It will now emerge that the crown jewel is the NUMI plant. Let me explain.

The darling of the investment community for the past twenty years has been high tech growth stocks. That's because they can run from $10 million in sales to $100 billion in sales in 10 smooth years. The stories of 10,000 percent stock gains are mostly true, if a bit overwrought. But growth covers a multitude of sins and death by a thousand cuts. The biggest headache is outgrowing your physical plant - offices or factories or whatever. MANY companies have actually DIED not from lack of execution, product, demand, sales, or innovation. But from MOVES. Outgrowing one facility and having to move to another is a company killer. It has to be planned and executed like a paramilitary operation and trust me, if you are bedeviled by screeching phones, not enough people, not enough space, not enough anything, that is hard to manage cogently. Eventually you HAVE to make the move, and in tech, if that network and telephone system and Internet and so forth aren't just perfect, you can stumble HEROICALLY and publicly right at the wrong moment. It's a killer. It's a nightmare.

The kind of problems to have you say? Sure. But what is missed is that they are STILL problems. And they can be HUGE problems. I've seen companies actually outgrow facilities they haven't move into yet. Facilities abandoned because they were too small by the time they were ready. I cannot describe management terror beyond "THE MOVE". It doesn't exist. Actual bankruptcy pales next to making "THE MOVE".

Tesla will NEVER move. Oh, they may open manufacturing satellite facilities most anywhere while expanding along. But they have 5.5 MILLION feet of space at NUMI, most of it entirely dark. I doubt they have even marginally occupied 500,000 sf. You can roam around in golf carts for days and there are some parts of NUMI so dark and so scarey that some say they are HAUNTED. Employees avoid those dark, spooky corners feverishly. The building must have at least 3 zip codes.

Point is, TSLA can grow from 15,000 cars a year to 500,000 cars without ever moving a thing. All organic add-on. No disruption -essentially forever for all practical purposes. They quietly acquired some adjoining property this month for a "test track". They can build that out now, or in 10 years. No worries. No press. No problem.

ANd the magic was, it was all FREE. Not free as in speech but FREE like Al Gajda's pickup truck. Toyota, taxed to DEATH by the State of California with the facility, bought 50 million dollars worth of Teslas stock and immediately demanded $48 million for the facility. TSLA got some huge tax breaks from the State of California for all the new jobs they were bringing. Talk about elegant. California is out except for the part that Tesla has actually delivered on the jobs thing - already 3500 of them and potentially BIG TIME. A hearty HELLO to our intern ANtonio at Tesla.

When reading stock analysts view of TSLA, see if they mention any of this.

And the difference between Al Gajda and the shorts? Deep knowledge. No thanks necessary Al. In fact, thank YOU for the battery order.

Stock picking is a black art and a horror. I'm wrong as often as I'm right but my main sin is being too early to the party. I got out of my June 47 calls in April. Yes at a huge profit, but I left a LOT on the table I have to tell you. Oh, and I never mentioned getting slaughtered in TSLA calls all during 2012. I'm sick over it. Actually I got pretty well but still left a lot on the table as I say. So take my advice and do whatever you think is best.

But I guess I'll double down and call it $200 prior to December 31st. Let's see how I do. I think the stock is going into FAD phase.

Jack Rickard