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Summary

  • I've been bullish on Tesla due to their history of meeting or exceeding expectations.
  • Tesla's stock has been lucrative because people believe the company can execute aggressively in the future; and past results prove that they can do so.
  • Today, Model X reservation confirmations went out early, causing the stock to shoot up yet again.

Another day - another expectation smashed by Tesla (NASDAQ:TSLA).

I've been saying it since I've been writing about Tesla - the one thing that I constantly give credit to the company for - aside from revolutionizing the auto industry - is the fact that they continue to meet or exceed the goals that they set out for themselves.

I've watched Elon Musk from the get-go and said to myself, "I'm going to trust this guy until he gives me a reason not to." So far, Musk hasn't given shareholders a reason not to trust him. It's no wonder that Tesla longs are a cultish, giddy group.

The stock has provided extremely lucrative returns to shareholders since its IPO around $20 just a few years ago. Those that have stuck with Musk have been rewarded handsomely.

And, because Tesla has such a forward looking valuation, it's those that have believed in the future aggressive growth of the company that continue to speculate, buy into the stock, and reap the rewards. Shorts, with the exception of a small correction from the $250 level, have been crushed every step of Tesla's way.

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So it was no surprise to me today when Tesla sent out Model X reservation confirmations and that sent the stock pushing higher to the tune of 6% mid-day. Tesla is doing what it does - getting things done right, and getting things done on time.

Seeking Alpha reported today:

  • Shares of Tesla Motors (TSLA +6.1%) trade higher after Model X reservation holders receive confirmation from the company on an early 2015 delivery.
  • The first prototypes are expected to roll off the EV automaker's assembly line in Fremont, California this fall.

Putting Tesla around $400 places its market cap right around the same area as major automakers like Ford (NYSE:F) and General Motors (NYSE:GM). No way that this could happen, you say? Consider this.

As I've said in the past, in all of the valuations of Tesla, people are focused on the production and sale of vehicles. But, you have to ask - when pushing the front of a semi-emerging market (electric vehicles), what kind of price can you put on the solutions that Musk and his team are coming up with as they encounter challenge after challenge? What will be the value of a Gigafactory when Tesla executes its plan for one, inclusive of all of the proprietary technology that is going to be exclusive to Tesla's factory?

And, furthermore, how many of these solutions will hold monetary value once Tesla is established and others start to follow in its path? Could Tesla branch out and become a battery company? Could they merge with another company? Could they explore self-driving options like Google, or drone manufacturing like Amazon? There's literally endless possibilities for the company to branch out to after they corner the electric car market.

Tesla's open source policy on their patents is going to lead to major expansion in the electric car industry, as well. That's going to be growth thats "good for the geese, and good for the gander."

As I said in my last article:

There is no doubt in my mind that this is the absolutely right decision for Musk to make. What Musk understands is that this isn't just Tesla vs. the rest of the car industry. This is about all electric vehicles gaining some prominence in our daily lives. The only way to ensure the safety of the electric vehicle market (without which there is no Tesla) is to try and make it the mainstream. What better way to help make it mainstream than to help share what you have learned thus far with those that are trying to enter into the same territory?

The interesting thing is with how quickly Tesla's technology is going to change, the patents may not even be as up to date as what Tesla is working on. What it may do, however, is create residual "clone" companies in Tesla's image which will serve two benefits:

  • They continue to help push electric cars, as a market, forward.
  • They remain behind Tesla, following Tesla's lead.

So when Tesla completes its Gigafactory ahead of schedule, and its more efficient than they though it could be, I won't be surprised. Tesla is reworking the automotive market book, and they're doing it with style.

This isn't just about cars, this is about pioneering an industry and leading the charge. Tesla is going to be synonymous with electric cars in the future the same way that "Google" is synonymous with searching for something on the internet and "Kleenex" is synonymous with a tissue.

Lest we forget we are offered yet another reason that Tesla could become a commodity in the future. As the tension in Iraq start to rise again, talks have been about nothing but the increasing price of oil. As oil prices increase, more and more people are going to see electric vehicles as an attractive alternative.

That coming brand recognition as being the best in their field could easily make Tesla worth the same as Ford or GM on paper just a couple of years from now. It's going to be whether or not Tesla branches out and continues to grow - maybe even outside of the "vehicle production" niche, that will determine exactly how much the company could be worth in the future.

With Musk's big thinking, would it surprise anyone if Tesla was the biggest company in the world ten years from now? Can't say it would surprise me.

If the past record of the company is going to be an indication of future progress, Tesla has a real shot at $400 no doubt.

Stay thirsty, Mr. Musk. Stay thirsty.

Source: Tesla To $400? If Its Short History Is A Sign Of The Future, It's Possible