NKLA) stock shareholders have been on a wild ride this week. On Tuesday, General Motors (NYSE:GM) announced a $2 billion equity investment in the electric truck maker, sending the stock shooting up 40%. Shares then slid 12% on Wednesday when short-seller Hindenburg Research accused the company of being “an ocean of lies.” And on Friday, NKLA stock is down another 16%.” data-reactid=”12″>Nikola (NASDAQ:NKLA) stock shareholders have been on a wild ride this week. On Tuesday, General Motors (NYSE:GM) announced a $2 billion equity investment in the electric truck maker, sending the stock shooting up 40%. Shares then slid 12% on Wednesday when short-seller Hindenburg Research accused the company of being “an ocean of lies.” And on Friday, NKLA stock is down another 16%.
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rolling a truck down a hill to get footage as if it were driving on a flat road. So what should investors do? Well, I’ll let you in on a little secret about the electric vehicle (EV) industry: It’s always been built on a series of lies.
have to raise billions. And that usually means bending the truth to get investor money.
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TSLA). Founder Trevor Milton will now take a backseat after GM’s massive investment. But if the thought of enriching a self-serving founder makes your skin crawl, then there are other ways to make money. So how mercenary are you?” data-reactid=”34″>So if you’re comfortable investing with hucksters, Nikola provides the best path to finding the next Tesla (NASDAQ:TSLA). Founder Trevor Milton will now take a backseat after GM’s massive investment. But if the thought of enriching a self-serving founder makes your skin crawl, then there are other ways to make money. So how mercenary are you?
Nikola Stock: A Startup’s Sins
adjusted their expectations for decades out.
AMZN) off the ground. But he managed to list the company in 1997 just in time. Only two years later, in 1999, The Wall Street Journal ran “Amazon.bomb” across the front of its Barron’s magazine. “Unfortunately for Bezos, Amazon is now entering a stage in which investors will be less willing to rely on his charisma and more demanding of answers” The Wall Street Journal wrote.” data-reactid=”37″>However, most startups also need to fool investors just long enough to raise capital. Few might remember the charisma that Jeff Bezos showered on investors to get Amazon (NASDAQ:AMZN) off the ground. But he managed to list the company in 1997 just in time. Only two years later, in 1999, The Wall Street Journal ran “Amazon.bomb” across the front of its Barron’s magazine. “Unfortunately for Bezos, Amazon is now entering a stage in which investors will be less willing to rely on his charisma and more demanding of answers” The Wall Street Journal wrote.
said Darryl Siry, Tesla’s former senior vice president for sales and marketing. “It’s a reality distortion field and it’s a powerful one. He gives the facts to fit the narrative he wants out there.”
From Startup to Grown Up
battery-electric and hydrogen fuel-cell electric” technologies, a rather important component to any electric vehicle.
agreement with GM, Nikola revealed it would rely on GM’s Ultium batttery system and Hydrotec fuel cell technology. These are fuel technologies that GM had developed for its 20 new EV models to release by 2023. So whether or not Nikola had the fuel technology becomes irrelevant.
just 5,000 Bolts a quarter.
It’s not often that a partnership benefits both sides. But here’s a time it does.
First-Mover Advantage
Wedbush analyst Dan Ives said. “There have been many skeptics around Nikola and its founder Trevor Milton’s ambitions over the coming years, which now get thrown out the window with stalwart GM making a major strategic bet.”
What’s Nikola Stock Worth?
Here’s the tricky part. Nikola now has a $19 billion market cap with basically zero revenues. Even Tesla was selling 22,000 cars by the time it reached that valuation.
But using some reasonable estimates starts to paint a better picture of what’s at stake with Nikola stock valuation.
hampered its ability to grow. Nikola, on the other hand, will have GM’s manufacturing heft at its disposal. If Nikola can instead grow to $30 billion revenues with an 18.3% EBITDA margin by 2029, its fair value jumps to $72, or a 43% upside.
Can You Stand the Dishonesty?
oddly busy cashing out of the company he founded, despite publicly telling investors otherwise.
Even startup founders need to draw the line on how far they’re willing to deceive investors. But that’s in the past. Now that Nikola is in far more trustworthy hands, it’s time for GM and CEO Mark Russell to make the most of Nikola’s “ocean of lies” and produce some gorgeous-looking trucks. Investors could yet win big
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