Nikola Analyst Presses Sell Button On Execution Risks, Hydrogen Fuel Cell Viability

Aggravating the recent weakness seen in Nikola Corporation NKLA shares, a Wedbush analyst said Thursday that he's turning bearish on the electric vehicle stock. 

The Nikola Analyst: Daniel Ives downgraded Nikola from Neutral to Underperform and slashed the price target from $45 to $15.

The Nikola Thesis: The downside risk in Nikola shares outweighs any positives for the stock, necessitating a bearish call, Ives said in a note. 

Although Nikola's EV and hydrogen fuel cell ambitions are attainable in the semi truck market, there are serious concerns over the  execution and timing of these ambitious goals, the analyst said.

The downgrade is predicated on two factors, he said: the departure of executive chairman Trevor Milton and resulting execution risks; and the ROI story around hydrogen cell vehicles weakening in the wake of battery innovations.

Milton's exit leaves a huge void to fill, given that he was the visionary, architect, and internal and external driving force behind the hydrogen truck developer, Ives said.

Despite Nikola's management bench now comprising former General Motors Company GM executive Stephen Girsky as chairman, its execution risks are significantly heightened, the analyst said. 

"The recent questions surrounding the Nikola story raised by the bears will be a dark cloud over the stock until answered, especially with no fundamental or delivery catalysts in the near term."

The battery innovations announced by Tesla Inc TSLA suggest that battery costs could be lowered well below the $100 kilowatt-hour threshold – a potential game-changer bringing about price parity on the EV front, he said. 

This seriously impairs the ROI story around hydrogen fuel cell vehicles in the long run, Ives said. 

NKLA Price Action: Nikola shares were down 11.91% at $18.63 at last check Thursday. 

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Photo courtesy of Nikola.