Stock Nikola Analysis: Buy or Not? [2022] Happy Investors
28 juni 2022 
6 min. read

Stock Nikola Analysis: Buy or Not? [2022] Happy Investors

Considering buying Nikola shares? Don't. In this analysis of Nikola stock, we can be clear about the immense risks of this start-up. After many years of empty promises, the company is still hugely loss-making with no marketable product. Sure, we can see the potential in Nikola shares in the long run. But the risk is extremely high. It's a speculative move. Why take the risk of buying Nikola stock when there are so many other good stocks?

Below is the entire analysis.

Stock Analysis: Nikola (NKLA)

Founded in 2014, Nikola Corp (NKLA) manufactures commercial vehicles in Phoenix, Arizona. Utilizing battery and hydrogen fuel cell technology, the company manufactures electric vehicles, engines, energy storage units, components, fueling station infrastructure, and a range of transportation solutions. 

All of the company's products are battery- or hydrogen-electric, including Class 8 heavy trucks, watercraft, and off-road vehicles. The Nikola is organized into three business units: Energy, Truck, and Powersports.

  • Energy Business Unit: Develop and construct hydrogen fueling stations to meet the hydrogen fuel demand for our FCEV and other customers, including charging solutions for BEVs.
  • Truck Business Unit: Develops and commercializes BEV and FCEV Class 8 trucks that provide environmentally friendly, cost-effective solutions for the short-haul, medium-haul, and long-haul trucking sectors.
  • Powersports Business Unit: Providing outdoor recreational vehicles powered by electric motors.

The company's strategy since inception had been quite revolutionary. But then it emerged that the CEO had been holding up a great story, and that Nikola's dream was further away than imagined. Since then, the company has been making adjustments, with a focus on electric trucks. 

The mission of this company has potential, but the execution is dramatic. There are many references to "fraud" on the Internet. 

Today, after all these years, they still do not have a marketable product. The production of EV trucks is said to have started. But even that we should possibly question?

Normally in our stock analyses, we also take a look at the financial situation. With Nikola shares, this is not necessary. We only need to look at the income balance sheet. Did you know that this company currently generates only 1.9 million in revenue? And how much loss would they make you think. Answer: 724 million loss... That's 1/3rd of the stock market value. 

The best tip we can give: Buying Nikola shares is probably going to cost you a lot of money!

best-value-stocks

Price Target of Nikola (NKLA)

According to Money.CNN, based on analysts' offering, the average price target for Nikola (NKLA) stock is $10.00, with a high estimate of $20.00 and a low estimate of $8.00.  

According to WSJ, based on analysts' offerings, the average price target for Nikola (NKLA) stock is $11.50, with a high estimate of $20.00 and a low estimate of $8.00.  

According to Market Beat, based on analysts' offerings, the average price target for Nikola (NKLA) stock is $11.43, with a high estimate of $15.00 and a low estimate of $8.00.  

Our opinion on Nikola stock price forecast: analysts are selling nonsense. Nikola shares currently stand at a market capitalization of about 2.5 billion. And that's after a price drop of -91%. But Nikola shares are really not worth that much at the moment. Why take the risk when there is so much choice of the best stocks?

Strengths and Weaknesses of Nikola (NKLA)

A brief analysis of Nikola stock based on its pros and cons shows that it is a fairly speculative move. By definition, a long-term investment, with the probability of a breakout probably far in the future. 

Strengths of Nikola

Several companies are now creating new electric vehicles which is in line with the trend of sustainability. Potentially, Nikola falls under sustainable stocks and can be included in one or more ESG ETF. 

It is potentially a niche player for electric and hydrogen trucks. They are also working on infrastructure to make this attractive to transportation companies. 

The vision is strong and has potential. Nikola shares have a relatively small market capitalization in relation to its potential. But this is no reason to buy Nikola shares, as the company has too many weaknesses and threats.  

Weaknesses of Nikola

The founder has been accused of fraud for not telling the full truth about the technology behind Nikola. The potential of hydrogen trucks is less attractive than he made it seem. This is a dramatic story and particularly weak point. 

Now Nikola is trying to make a strong turn to electric trucks. However, this is a hugely capital intensive move. In the process, they are already seriously behind the stronger competitor with more money. Purely based on this situation, we do not want to buy Nikola shares. 

Despite all this and the company has been around for a while, they only have one electric truck for sale. And this model is not meeting the expectations of its customers.

Threats and Opportunities for Nikola (NKLA)

Nikola shares had potential. As far as we are concerned, this potential is now very far away. It is true, however, that the market value has fallen dramatically, making it more interesting as a long-term speculative investment. But as far as we are concerned, we should not buy Nikola shares, simply because there are much better investments. 

Nikola stocks have opportunities and threats. We are now focusing specifically on the threats.

Threats for Nikola 

There is a lot of research being done in the field of renewable energy cars, and big names like BMW and Volkswagen are becoming Nikola's competitors.

Energy is being used in new ways in cars. Competitive pressure can increase operating costs and decrease profits.

Maintaining long-term sustainability is imperative when it comes to clean energy automobile companies. Considering Nikola's unstable manufacturing conditions and the lack of E.V. support infrastructure, this is a potential threat.

best-value-stocks

Risks analysis of Nikola (NKLA)

Nikola appears to be on the right track after years of trouble. However, if you are planning to purchase the stock, investors should consider some key risks. As of now, Nikola's trucks do not meet the needs of customers and have yet to be tested for safety. The process of making battery-electric and hydrogen trucks is technologically complex. It is possible that the trucks won't perform as Nikola expects. In compliance with the Federal Motor Vehicle Safety Standards, Workhorse Group had to recall its vehicles.

Secondly, even if Nikola's trucks pass the initial hurdle and work well in the field, the company might still find it difficult to produce and sell the vehicles profitably. There aren't many pure-play electric vehicle (E.V.) companies in the U.S. right now, with Tesla obviously being the exception.

Lastly, Nikola may have difficulty finding enough demand, especially for its FCEV trucks. Electric class 8 trucks have been launched or will be launched by a number of new and established automakers. They will pose serious competition for Nikola, and they may have a significant advantage over Nikola due to their greater expertise and financial resources. Nikola is competing with Tesla, Peterbilt, Volvo, and Navistar.

Moreover, fuel cell trucks may not find enough demand if battery technology advances quickly enough for battery electric vehicles to become economically viable. In the hydrogen fuel cell truck segment, Nikola faces the likes of Hyundai and Toyota.

The company appears to be making progress, but there is a long way ahead that is full of risks before it can establish itself as a serious contender. Other E.V. companies present more attractive investment opportunities. 

Conclusion: to buy Nikola stock or not?

We don't want to spend more words on this than necessary. Our conclusion: do not buy Nikola shares.

About the author
Happy Investors is all about your long-term growth, both financially and in personal development. We write about long-term investing: stocks, real estate, crypto, and alternative investments. Grow your life. Become a Happy Investor!
Place comment

Happy + Insider

Happy Investors is an official partner of Capitalist Exploits. The Insider membership of Capitalist Exploits helps us to achieve financial freedom. As an Insider member, you get access to high-quality stock research as well as portfolio guidance. Get instant access to 100+ asymmetric investments for minimal risk and potential x5 or more returns. This is an exclusive service for stock investors with 1500+ satisfied members giving a 4.8/5 review. As an official partner we are pleased to offer an exclusive $1000 discount.

stock-research

Stocks & ETF's

Time in the market beats timing the market. Start investing today! Buy stocks 100% commission-free at eToro and build your wealth. Let money work for you, and enjoy life. Don't wait for the perfect moment. Invest for the long term and have patience. Your capital is at risk, so start with lower-risk investments such as bonds, ETF's, dividend stocks, etc. eToro is a good choice for USA investors (to avoid 0,5% currency conversion). 

buy-stocks-long-term

IPO Stocks at Initial Price

At Freedom24, the world largest broker with +40.000 stocks, we can buy IPO stocks at initial price. The average return on investment is approx. 60% for 93 days (no guarantee for future returns). All IPOs are selected by investing experts. Your capital is at risk. Freedom24 is only available for European investors.

ipo-long-term-investments

Crypto & Stock Trading

At NAGA, the world biggest Social Trading and Crypto Trading Platform, you can AutoCopy traders at stocks, crypto and forex. Copy the NAGA 10 most profitable traders. Also, NAGA is known to offer solid platforms to trade crypto and stocks. Other fees may apply and your capital is at risk. NAGA is only available for European traders.

autocopy-traders