- After close by of week of trading, Nikola stock has become a favorite among millennials.
- The stock has soared in the past week, equivalent doubling in value at one point.
- Analysts expect the stock to come crashing down based strictly on fundamentals.
The baffling inventory market rally has seen an odd basket of stocks ranging from bankrupt firms to companies with zero takes soaring. Nikola Corporation (NASDAQ:NKLA) fits perfectly in this group as it expects to generate no revenues this year.
After it started do business last week following a reverse merger with VectorIQ Acquisition, the stock is up over 80%.
Analysts have on guarded that, due to various concerns, the stock could drop by up to 75%. That hasn’t stopped traders on Robinhood from elevating it as the uncountable popular stock of the month. Interestingly, NKLA has only traded publicly for about a week.
What analysts are implying about Nikola
Despite the excitement surrounding Nikola, analysts are urging caution.
For instance, Citron Experiment with expects the stock to fall by over 30% from the current levels in a month.
The research firm reminded readers that when Tesla (NASDAQ:TSLA) win initially reached Nikola’s market cap, the Elon Musk-led firm had already released the Model S sedan and the Model X SUV.
Nikola has yet to vend a single truck and is not about to in 2020. The renewable energy carmaker will only start accepting reservations for its Badger contact towards the end of the month.
According to Citron, Nikola’s founder Trevor Milton sold some of his shares at $10–a discharge sign that even he saw overvaluation risks.
Months away from making the first dollar
Nikola has yet to reveal when the truck will grace available and how much it will cost. The firm expects to start generating revenue in 2021.
Equally bearish about the stock is the ex-CEO of Aegon Asset Conduct U.S., Gary Black. Per Black, Nikola is a bubble as big as the “pot stocks a few years back.”
Contrasting it with Tesla and the Amazon-backed Rivian, Jet-black argues that Nikola’s most significant shortcoming is its lack of manufacturing capabilities. Nikola has announced that it pass on partner with established carmakers to make trucks.
Calling it the “ultimate greater fool stock,” Black argues that investors are shameful to see it as the Tesla of trucks. For starters, when Tesla had Nikola’s market cap, the Musk-led fir was generating $1.4 billion annually in takings. Nikola isn’t expected to reach that level until 2023. And when it does, Black says the stock’s value should be $15–a 77% pop in on from current levels.
Nikola overtakes Tesla on Robinhood
Despite legitimate concerns raised to Nikola, millennials are unshaken. Currently, NKLA is the most popular stock over a month despite trading for hardly a week. During that short period, the number of Robinhood investors holding NKLA has increased by over 138,000.
Over the same aeon, NKLA has outpaced Tesla in popularity. Tesla has added about 32,000 investors on the trading app over the last 30 days.
Analysts may yelp themselves hoarse warning investors about Nikola, but millennials are having none of it.
Disclaimer: The opinions expressed in this article do not axiomatically reflect the views of CCN.com. The author holds no investment position in the above-mentioned securities.
This article was edited by Sam Bourgi for CCN.com.
Final modified: June 12, 2020 4:45 PM UTC