Tramino
Nikola Corporation (NKLA) has wiped millions of dollars' worth of investor money since its market debut in June 2020. The company has lost more than 95% of its market value since the IPO (adjusted for the reverse split), and even more
Nikola Stock: Pain Will Not End Soon
Summary
- Last September, I warned investors of betting on Nikola Corporation, as I thought the company was disadvantaged compared to pure-play BEV truck manufacturers.
- Despite some progress in restructuring, Nikola's profitability remains a concern due to high production costs and limited market potential for fuel cell electric vehicles.
- Nikola is losing money on each truck sold. The average production cost of a Nikola truck was $679,000 in Q4 2023 while the ASP was just $351,000.
- Under normal circumstances, I would not be alarmed by a young company selling a product at a loss to gain market share. However, when it comes to Nikola, this is a bigger problem than it seems.
Dilantha De Silva is an experienced equity analyst and investment researcher with over 10 years in the investment industry. He writes insightful articles for Seeking Alpha, GuruFocus, TipRanks, and ValueWalk, with a significant following on Seeking Alpha. Dilantha’s expertise spans across various sectors, with a particular focus on small-cap stocks that are overlooked by Wall Street analysts. He is a CFA Level III candidate and an Associate Member of the Chartered Institute for Securities and Investment (CISI). Dilantha has been featured on CNBC and Bloomberg, and his work has been prominently showcased on Nasdaq, Yahoo Finance, and other leading investment platforms. When not analyzing stocks and writing, Dilantha is involved in private equity transactions, including acquiring and managing businesses.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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