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Nikola: Press Releases Are Nice but Delivering the Goods Is Key

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Nikola’s (NKLA) PR division has been busy lately. On Tuesday, the company said it had entered a multi-year supply agreement with Proterra, whose battery technology is now set to power Nikola’s semi-trucks. Prototype systems should start making their way to the EV truck start-up by 2Q22, with production of the first Proterra powered Nikola semi-trucks beginning in 4Q22.

The news follows last week’s announcement that the California Air Resources Board has decided the Tre battery-electric vehicle (BEV) is eligible for the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project program, thereby qualifying Nikola for a $120,000/truck incentive. And prior to that, NKLA notified investors it had inked an LOI with Covenant Logistics Group for 10 BEVs and 40 FCEVs, pending a demonstration program’s satisfactory completion.

“So, NKLA for sure has had a series of positive press releases and developments,” said RBC’s somewhat skeptical analyst Joseph Spak. “In some respect, given NKLA is still very much a start-up and venture investment such announcements and milestones are really all investors can look for near-term.”

However, the analyst goes on to add the company “can’t play the press release game for ever.”

Spak believes the stock’s trajectory will be determined by more important factors such as updated mid-term financial targets and model, which since the original SPAC merger and beyond 2021’s plans, the company has said little of, despite the big changes which have taken place.

Therefore, along with Nikola’s 4Q21 earnings on Feb 24, Spak will be expecting “some high-level delivery, revenue and cost guidance” for 2022.

Spak will be looking for the company to deliver 350 BEVs in 2022, mainly in the latter half of the year, below the Visible Alpha consensus’ forecast of 486 trucks, which appears a “bit aggressive” to the analyst. He also notes that during Nikola’s 2020 deal presentation, the company’s target stood at 1,200 units in 2022. Spak is also hoping Nikola will host an analyst day this quarter, which should include a revised mid-term financial plan.

All told, Spak’s rating stays a Sector Perform (i.e., Hold), although his $11 price target provides room for ~46% growth in the year ahead. (To watch Spak’s track record, click here)

Overall. the Street is flashing mixed signals here; on the one hand, based on Holds only – 4, in total – the stock makes do with a Hold consensus rating. However, the average price target is an optimistic one; at $13.67, the figure implies upside of ~82% over the next 12 months. It will be interesting to see whether the analysts upgrade their ratings or lower price targets over the coming months. (See Nikola stock forecast on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.