Nikola is purely speculative but ok for day trading


Is it Memorex? Or is it real? Nikola (NKLA) is due to report at the end of February. Eight sell-side analysts currently cover the name. The consensus for Adjusted EPS is at a loss of $ 0.30 per share (range of $ -0.42 to $ -0.27) on revenue expected to reach nearly $ 2.6 million. Yes, it’s an “M”. Analysts see the company losing $ 0.87 per share this year, and even more … $ 1.02 next year. The bad numbers are basically the result of the company overcoming the embarrassment of the Trevor Milton era and the fact that they haven’t really moved any product yet. These negative aspects can evolve in a positive way. Quickly.

News

Last Tuesday, Nikola confirmed that he had reached a resolution with the Securities and Exchange Commission to address measures taken during the Milton era. Nikola will pay the SEC $ 125 million in five installments starting before the end of 2021 and ending in 2023. Nikola will not admit or deny anything and is asking Milton for a refund.

On Wednesday (yesterday), Heniff Transportation Systems placed an order with Thompson Truck Centers (a member of the Nikola sales and service dealer network) to initially acquire 10 Tre BEV trucks. During the initial deployment of these 10 units, Heniff and Thompson agreed to continue placing 90 additional trucks in the Heniff fleet.

On Thursday (this) morning, Nikola reports that the company made its very first customer delivery of a zero-emission Tre truck to Total Transportation Services in Southern California. The firm is finally on the dashboard.

Fundamentals

I will surprise you. The company has a fairly good track record. The company ended the September quarter with $ 587 million in cash, cash equivalents and short-term investments, which includes the lion’s share of all current assets. Total assets are just over $ 1 billion, which includes tangible capital assets. Current liabilities represent less than half of the company’s cash balance, while total liabilities (minus equity) are barely more than current liabilities. The company has almost no debt on the books, and none on the balance sheet. The current ratio is close to 2.5.

Off the balance sheet, at the end of November, over 15% of the company’s total free float was held in short positions, which I found interesting. Dan Ives, who is the only analyst I can find covering this name and who is rated five stars at TipRanks, has a “hold” rating on NKLA, but with a price target of $ 15. The stock closed at $ 9.40 last night, but was trading above $ 13 by the time (Nov 8) Ives set that price target. Obviously, NKLA is moving fast and higher this morning.

Table

Interestingly, readers will see that NKLA suffered a 100% retracement of the rally from August to November as November ended in December. A 38.2% retracement of that sale is near the stock’s 50-day SMA ($ 11.29). This is where I see resistance as the stocks come out of a small double bottom with a pivot of $ 10.50. Am I investing here? It wouldn’t be my first choice in the EV space. I like Lucid (LCID) and Rivian (RIVN) better, and have traded in and out of LCID since going public.

The cream of the crop remains Tesla (TSLA), that’s obvious, and in my opinion the challengers with the greatest mass potential remain the historic automakers Ford Motor (F) and General Motors (GM).

What I’m telling you is that Nikola is purely speculative. Okay for day trading in my opinion, but not that far this morning as the stock has literally been a one way street. The stars of this industry, if I am asked my opinion, are Musk, and now Farley and Rawlinson.

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