Stock in hydrogen-truck-technology company Nikola is having a terrible time lately. The slide continues Monday after an analyst got more bearish on the company’s outlook.
Nikola (ticker: NKLA) shares are down 6.5% in midday trading Monday to $10.27.
Wedbush analyst Dan Ives slashed his Nikola price target to $13 from $25. “Overall we still believe the company’s [electric vehicle]] and hydrogen-fuel-cell ambitions are attainable in the semi-truck market,” wrote Ives in a Monday report. That’s the good news. He also believes that President Joe Biden’s support for alternative-fuel vehicles is important for American EV and hydrogen industries. Still, he has concerns over management execution and timing of Nikola’s timeline and product rollouts. “Given these concerns we are lowering our price target.” Ives maintained his Hold rating on the stock.
Monday’s declines add to a brutal stretch for Nikola stock, which is down about 33% over the past month. The S&P 500 and Nasdaq Composite, home to many high-growth, new-technology stocks, for comparison, are up about 6% and 5%, respectively.
What’s more, shares are down almost 90% from a 52-week intraday high of almost $94 set last June. Back then, Nikola’s market capitalization reached almost $30 billion, roughly equivalent to what Ford Motor (F) was worth. Now Nikola’s market capitalization has fallen to about $4 billion—or roughly a third of GameStop ‘s (GME) valuation.
The declines have been breathtaking. A few issues are to blame. First a negative research report from a short seller sent Nikola stock lower in September. That report also disrupted a deal with General Motors (GM), and led to the departure of founder Trevor Milton. After a GM deal was restructured following the short seller’s report, Nikola killed off its Badger light-duty-truck program, disappointing investors.
More recently, many speculative, high-growth, EV-related stocks have sold off as money has left the space and rotated into new ideas. American depositary receipts of Chinese EV maker NIO (NIO), for instance, are down roughly 46% from a 52-week high set in January. Fisker (FSR) stock is off roughly 60% from a March 52-week high of almost $32.
With Ives’ cut, analyst target prices for Nikola stock now range from $13 to $47. The $34 bull-bear spread is more than 300% of the current stock price. That is roughly 8 times as wide as the spread for a typical stock in the Dow Jones Industrial Average.
That’s one illustration of the fact that the deterioration in Nikola’s share price has been swift and surprising.
Write to Al Root at [email protected]
