Market Overview

Nikola Surges Following GM Exec's Comments On EV Deal

Share:
Nikola Surges Following GM Exec's Comments On EV Deal

Nikola Corporation (NASDAQ: NKLA) shares — which have retreated notably off their early June highs of $93.99 amid short seller allegations of flawed fundamentals and the subsequent resignation of founder Trevor Milton — were staging a mini-rally Wednesday.

What Happened: The electric truck developer's shares were reacting to comments by General Motors Company (NYSE: GM) President Mark Reuss in an interview with CNBC, keeping alive hopes of a partnership between the automakers.

GM and Nikola announced a deal in early September under which the former would help engineer and build the latter's hydrogen-electric pickup truck Badger.

The deal, however was not consummated by the anticipated closure date of Sept. 30, which put further pressure on Nikola stock.

Related Link: Nikola Lock-Up Expiration Could Be A Ticking Timebomb

Rekindling the deal hopes, Reuss told CNBC that GM continues to "work the opportunity" of its $2-billion deal with Nikola, although it hasn't been finalized yet.

"The opportunity to put our fuel cells into a class 7 and 8 vehicle is spectacular. We know there's great operational cost advantages there, there's great efficiencies and there's great opportunities," the GM exec told CNBC.

Why It Matters: A GM deal, if it materializes, could vindicate Nikola, which has been criticized by short sellers. 

The $2-billion equity stake GM offered would provide financing to Nikola in a capital-intensive industry.

As a consequence, the beaten-down stock could take off.

NKLA Price Action: At last check, Nikola shares were rallying 10.88% to $22.98. 

Related Link: Nikola CEO Downplays Badger's Role, Says 'Always Focused' On Heavy Trucks, Hydrogen Infrastructure: FT

Photo courtesy of Nikola. 

 

Related Articles (NKLA)

View Comments and Join the Discussion!

Posted-In: CNBC electric vehicles EVsWIIM Movers Tech Media Trading Ideas Best of Benzinga