Nikola stock price analysis: dangerous to short at current level


Nikola (NASDAQ: NKLA) stock price is sitting at its all-time low as concerns about the company’s future remain. The car company, once valued at billions, has now become a penny stock trading at $0.73. This price is about 99% below its all-time high, giving it a market cap of over $480 million.

Existential risks remains

Nikola Corporation is facing substantial existential risks as the cost of production remains at an elevated level. Earlier this month, the company said that its quarterly revenue came in at $11.12 million, which was lower than the expected $12.6 million. The company lost 31 cents per share.

Nikola’s revenue came after the company started delivering its trucks. In Q1, it sold 31 trucks to dealers. The cost of revenue came in at $44 million. Like other new car companies, the cost of developing its trucks will remain at an elevated level for a while.

Unlike Lordstown Motors, which I wrote about here, Nikola has the benefit of a relatively solid balance sheet. It ended the quarter with $206.3 million in cash and access to capital of over $706 million. These funds gives the company a good breathing space in the coming months.

The company hopes to deliver between 30 and 60 new battery trucks in the second quarter. This means that its revenue will range between $10.5 million and $21 million. Nikola hopes to reach its breakeven point in 2024.

Nikola faces two key risks ahead. First, the company will need more capital as it works to scale its operations. This means that it could be forced to dilute investors further in the future. Second, the company is pegging its future on hydrogen. I believe that hydrogen is more complex than BEV. The company’s CEO said:

“The future of Nikola is hydrogen, hydrogen with our HYLA energy brand, together with our Class 8 hydrogen fuel cell truck. And for more efficiency, integrated autonomous technology, software and vehicle controls in our purpose built trucks.”

Nikola stock price forecast

NKLA chart by TradingView

Turning to the daily chart, we see that the NKLA stock price has been in a strong bearish trend for months. In March, the shares moved below the important support at $2, the lowest level on December 14. The shares are below all moving average while the Stochastic Oscillator has moved below the oversold level.

Therefore, the outlook of the shares is bearish, with the next support at $0.40. In the near term, the shares could see some volatility, including a short-squeeze.

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