Nikola (NKLA) Stock Analysis

US market is looking forward to Nikola Corporation for reaching the highs in the coming phases. NKLA has filed a prospectus for allowance of dumping a large number of shares that will cause overhanging of the stock. The market value of the stock is $21 B which is coming closer to the Ford level. The promising of the company is similar to the Tesla levels and there is an aim of building hydrogen fuel-cell electric trucks by the company. There is a hype of the stock away from reality and this is the reason that NKLA is still not preferred by many stock owners.

Merger with VecroIQ

The company had a merger with VectoIQ this year but the shareholders are not ready to stay after that decision as well. Before the deal was announced, the stock prices were $15 and they even went up to $90 after signing the deal with VectoIQ.

A few weeks ago, there was a combined share and warrant floated to the company for about77M shares floated on the futuristic date. The value decided for a warrant is $11.50 which will collect $275M on the whole. The negative aspect is that the stock will be given an overhand because the shareholders wish to sell over 1/5th of the company stocks. There will be about a billion cash left with Nikola after this for funding the operations.

The market is assigning the Tesla valuation to NKLA without even the production of one vehicle. Nikola Corporation listed a backlog of $10B with 14K orders at the end of 2019. The present ordering from the company is up to $14B. There is no production expected until 2022-23. As per the case of Tesla, the revenues reached up to $2B and the stock-flow was not expected to grow beyond $40. Tesla took about four years to generate the figure of $14B in total.

Nikola might have got the large ordering but would require considerable time for gearing up its production. Tesla is the biggest example of showing its best manufacturing skills on a mighty scale for meeting the production targets for the years to come. It is impossible to reach the thinking capability of E. Musk for the high-end production target.

The key business of Nikola is still pending and this phase of Covid-19 spread all over the world will not prompt the investors to be so excited about it. It is not sure that the shareholders will dump these stocks or not but keeping a watch could be the concern. Investors need to be aware of the potential of the stocks and the stock price target. The stock tips could be considered but keeping your research as a stockiest is very essential to make the right move.

About Travis Garlick 1791 Articles
Been writing about and trading stocks since 2013. Manage a group of micro-cap investors on Facebook with over 15,000 members. Turned $8,500 into 185k the first year I started trading stocks and haven't looked back.