- Nikola, an electric truck startup, saw its stock price fly high as it went public and announced a deal with General Motors.
- A damning short-seller report, however, pared some of those gains back to July levels.
- Still, Wall Street analysts are firm in their convictions that the stock could rise more than 50%.
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Nikola, the high-flying electric-truck maker, hasn’t seen its stock price recover yet from the damage inflicted by a short-seller earlier this week, but that’s not for lack of optimism on Wall Street.
Analysts have largely been unswayed in their conviction about the startup, even after it corroborated some of Hindenburg Research’s allegations while rebutting its overall thesis. In analysts’ eyes, the stock could still have a 60% upside.
But that doesn’t mean things will be easy. The company hasn’t actually sold any trucks yet, and its $2 billion deal with General Motors doesn’t actually involve any cash — yet.
“Despite the loud bear noise this week we continue to believe the GM partnership is a huge shot in the arm for Nikola and cements credibility not just for its Badger production slated to begin by the end of 2022 but for its hydrogen fuel cell ambitions and semi truck vision going forward,” Dan Ives, an analyst at Wedbush, said this week.
“Taking a step back there have been many skeptics around Nikola and its founder Trevor Milton’s ambitions over the coming years, which remains the challenge but also the opportunity to execute on its vision now with the stalwart GM partnership a major catalyst,” he continued. “For Nikola, this still remains an execution story over the coming years and will be a noisy stock until the EV/hydrogen fuel cell trucks hit the road and deliveries begin to ramp.”
In presentations at a conference hosted by RBC Capital Markets, Nikola “vehemently defended itself,” analyst Joseph Spak said. The company also thinks investors misunderstand its eventual goal: to sell hydrogen, not trucks.
“We believe the ability to execute by leveraging other companies’ core competences — specifically GM, CNH and Bosch – is a major positive, not a negative,” JPMorgan analysts said. “We also think speed, flexibility and unencumbered readiness to change course quickly with evolving circumstance in a fast-developing market are fundamental and desirable attributes of a disruptor.”
The bank expects Nikola to announce hydrogen fuel station partners in the coming weeks, and to reveal its Badger consumer truck and F-150 competitor the first week of December.
There’s still one outlier though: founder Trevor Milton.
Since Nikola’s founding, Milton has been the public face of the company — especially online. He’s since transitioned to a founder role but the tweets kept coming in an almost Musk-ian cadence.
“It’s a bit confusing trying to follow Trevor and his various social media outlets about the timing and cadence of communication of the different variables that you’re talking about,” an analyst remarked on Nikola’s first-ever earnings call in August.
Now, JPMorgan says “we look for Nikola to adopt a more conservative stance toward messaging (i.e., rein in the Chairman and Founder a bit).”