The price of the Nikola Corp (NAADAQ:NKLA) stock finally started moving , down, again. Consequently, analysts have been slashing earnings estimates for some time, though many maintained their ratings long after problems were evident. Here is why and what to expect in the future.
Nikola is one “big”, complicated company.
CEO Mark Russell is causing a bad mood with new statements about the future of the company, the Nikola share loses double-digit in value on Friday.
“The Badger was an interesting and exciting project for some shareholders, but our institutional shareholders are mainly focused on the business plan,” the Financial Times (FT) quoted Russell as saying . “Even before we were listed on the stock exchange, our main business plan always focused on heavy trucks and hydrogen infrastructure,” he continued.
As reported by the FT , Russell said Thursday that all of Nikola’s main goals – including announcing a hydrogen partner this year and starting production of its first electric truck with Iveco late next year – are on track.
There’s no clear snapback or recovery for NKLA, but…
Hindenburg Research’s fraud allegations flared up immediately after a published deal between Nikola and General Motors (GM). Due to the incidents, however, the planned collaboration could not be finalized. The companies have until December 3rd to close the deal.
Either there’s more to this story that hasn’t come out yet, or the news out of Nikola has gotten so dreary of late that a CEO downplaying its own products doesn’t elicit even a yawn.
But Russell’s controversial statements did weigh on Nikola shares again. Right now the stock is down 14 percent to $ 19.88.
Given the stock’s abysmal performance this year, is the risk/reward now worth it? Not really at the moment as I’d want to see some revenue momentum first. There’s just nothing exciting going on to recommend the stock, but if you risk now and NKLA closes the deal with GM, this is probably the best time to invest.
While the next couple quarters likely will be bumpy, the stock has already discounted the bad news for now.
Given the confluence of factors that could benefit NKLA’s business next year, I think there’s still opportunity at hand for investors in the long run. And that’s hardly something to be blue about.