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This Nikola Analyst Sees More Pain Ahead For Investors

This Nikola Analyst Sees More Pain Ahead For Investors

Shares of Nikola Corporation (NASDAQ: NKLA) were losing one-quarter of their value Monday, and at least one analyst is modeling for more downside ahead.

The Nikola Analyst: Wedbush analyst Daniel Ives maintains an Underperform rating on Nikola's stock with a $15 price target.

The Nikola Thesis: Nikola's stock was hard-hit after General Motors Company (NYSE: GM) "surprisingly" said it won't be taking an ownership stake in Nikola as part of a deal between the two companies, Ives said in a Monday note.

In addition, General Motors won't act as a manufacturer for Nikola's Badger.

Instead, the two auto companies inked a non-binding memorandum of understanding related to a global supply agreement.

This is a "positive" for Nikola's outlook, but the fact that the prior agreement no longer stands, including potentially billions of dollars allocated to R&D, is a "major negative blow to the Nikola story," the analyst said. 

"This went from a game changer deal for Nikola to a good supply partnership, but nothing to write home about," he said. 

Click here to check out Benzinga's EV Hub for the latest electric vehicles news.

Deutsche Bank's Nikola Concerns: Nearly coinciding with the revised GM agreement, around 130 million shares will unlock on Tuesday, and this will more than double the stock's free float, MarketWatch reported.

Most of the shares are controlled by Nikola founder Trevor Milton, and if he decides to sell some shares, it could create "meaningful technical pressure on the stock," said Deutsche Bank analyst Emmanuel Rosner, according to MarketWatch. 

"We could envision large selling on his behalf given the bulk of his wealth is tied up in NKLA shares, and that he is no longer affiliated with the company," the analyst said. 

NKLA Price Action: Shares of Nikola were trading lower by 26.08% at $20.65 at last check Monday. 

Photo courtesy of Nikola.

Latest Ratings for NKLA

Dec 2020Evercore ISI GroupInitiates Coverage OnIn-Line
Nov 2020Loop CapitalInitiates Coverage OnBuy
Sep 2020WedbushDowngradesNeutralUnderperform

View More Analyst Ratings for NKLA
View the Latest Analyst Ratings


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