Nikola Motors Stock has the internet abuzz. Are they the next Tesla? If you frequent any stock market message boards...you'll see a lot of people who do believe just that.
The short answer to whether you can buy Nikola Motors stock is YES! You can buy shares of Nikola Motors stock, or at least the company that is about to become Nikola Motors.
VectoIQ, trading under ticker symbol VTIQ, is a Special Purpose Acquisition Company, or a “SPAC.” Often called “blank check companies,” SPACs are publicly traded companies that do not have operations.
Instead exist simply to raise capital to acquire another existing company. They typically have two years to complete a transaction, or the company will be liquidated, and the money returned to the investors.
Entrepreneurs may like this option because it is faster than the traditional IPO process, and is less exposed to the vicissitudes of the market.
During uncertain market periods like we are currently experiencing, we often see a lot less IPOs because companies are unlikely to get what they think they are worth when investors are on the sidelines.
VectoIQ completed their IPO in May of 2018, listing common shares at $10. The stock price didn’t stray far from that $10 mark until the reverse merger with Nikola was announced on March 2nd of this year.
Nikola is led by Stephen Girsky, a former General Motors executive, so its no surprise that they found a company in the vehicle manufacturing industry.
There will be a special shareholders meeting on June 2nd to vote on the Nikola Motors transaction. Assuming approval by shareholders, the deal should close within a couple weeks after the vote.
Nikola Motors was founded in 2014 by Trevor Milton, who is described on the website as a “serial entrepreneur.” Milton was founder and CEO of dHybrid Systems, LLC, a natural gas storage technology company that was acquired by Worthington Industries. Mark Russell joined Nikola Motors in February of 2019 after 6 years as the Chief Operating Officer of Worthington.
Nikola has very ambitious plans for the future, as evidenced by their mission statement: “Transform the transportation industry while improving employees lives and leaving the world a better place.”
It is organized into three divisions. The Motor Company will design, built, and market both pure play electric semi-trucks as well as hydrogen electric drive trains for semis.
The energy company will build out a network of hydrogen refilling stations for their trucks to refill across the country. Finally, there is the power sports division, that will make electric off-road vehicles and personal watercraft for commercial and military markets.
While Nikola will be making battery powered trucks, they are really betting big on hydrogen technology. They intend not only to build the trucks, but also to build out the filling stations that will allow the technology to be widely implemented.
Nikola believes they can match battery powered electric motors in horsepower and, of course, zero emissions, while eliminating issues like long recharge times, limited range, and extra weight.
Investors should be wary of lawsuits going both ways already between Nikola Motors stock and Tesla. Nikola recently won a small victory in one of these cases, but the battle appears to be far from over.
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Nikola Motors currently does not currently have revenue. I found two press releases regarding partnerships to begin building trucks – one with a company in the US and one in Europe – but it doesn’t appear that there have been any deliveries of their vehicles yet.
The do, however, have $14.3 billion in “pre-order reservations,” including an order for 800 trucks from Anheuser-Busch.
If VectorIQ’s shareholders approve this merger, the transaction will increase the cash on Nikola Motor’s balance sheet by $530-770 million, which the company plans to use in building a plant in Coolidge, AZ. When the deal closes, the stock ticker will change to NKLA.
Short interest increased today. I tend to follow short interest to get an idea if there will be a strong short squeeze when a catalyst comes around...like a approval, PR, or something along those lines. Be sure to check shortsqueeze for updates on the data chart below.
At this time, this stock is highly speculative. With that said, with high risk comes the potential for very large rewards.
Tesla has proven that there is enormous appetite in the market for companies that can help transition the world from burning fossil fuels to move products and people around the planet. After a huge run up the past two weeks,
NKLA is trading upwards of $50 as of June 8th giving it a market cap of around $`,5 billion. Tesla’s market cap is currently sitting around $150 billion; if NKLA stock can eventually grow to that valuation, that would represent a 23,000% gain. Using Peter Lynch’s baseball terminology, that’s a 230 bagger! Not bad.
What do you think? Is Nikola Motors stock worth a gamble?
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