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What's in Store for Nikola (NKLA) This Earnings Season?

·3 min read

Nikola Corporation NKLA is slated to release first-quarter 2021 results on May 7, before the opening bell.

In the last reported quarter, Nikola incurred loss per share of 38 cents, marginally wider than the Zacks Consensus Estimate of a loss of 37 cents. The Zacks Consensus Estimate for first-quarter 2021 loss is pegged at 27 cents per share. The loss estimate has widened by 5 cents over the past 60 days.

Key Factors

Nikola saw grueling times last year, especially when the short-selling firm Hindenburg Research published a report accusing the former of a series of fraud in showcasing its electric-vehicle technology. Following Hindenburg’s allegations, Nikola’s CEO and founder Trevor Milton resigned from the company, which further dampened investors’ faith in the firm.

In fact, once dubbed as the Tesla TSLA of the trucking industry, Nikola was slated to enter into a deal with General Motors GM, which would aid the former in engineering and manufacturing its Badger, a fully-electric and hydrogen fuel-cell electric pick-up truck. However, post the allegations by Hindenburg, General Motors pulled the plug on the deal with Nikola for the Badger truck. Instead, the two companies merely entered into a non-binding memorandum of understanding related to the integration of General Motor’s Hydrotec fuel-cell system into Nikola’s commercial semi-trucks.

Moreover, last December, Nikola and Republic Services discontinued their collaboration on the development of a new refuse truck.

The above-mentioned series of unfortunate events is likely to have continued to adversely impact Nikola’s first-quarter 2021 earnings. Shares of the company, in fact, depreciated 9% during the first quarter.
 
Nonetheless, on an encouraging note, during the quarter in discussion, Nikola clinched a competitive electric rate schedule with Arizona Public Service Company, making it possible for the former to produce hydrogen at price parity with diesel fuel, thus enabling the company to accelerate the development of hydrogen-based fueling solutions for the transportation industry. The agreement is crucial for advancing the future of zero-emissions transportation and building a hydrogen economy. This is likely to have been beneficial for the company’s first-quarter margins.
 
Further, Nikola’s partnership with CNH Industrial CNHI, aimed at accelerating penetration into high-potential European markets as well as the company’s progress made at the joint venture manufacturing facility on IVECO’s campus in Germany, is likely to have provided some respite to the truck maker’s bottom line during the quarter under review.

Earnings Whispers

Our proven model does not predict an earnings beat for Nikola for the to-be-reported quarter, as it does not has the right combination of two key ingredients. A combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Nikola has an Earnings ESP of 0.00%.
 
Zacks Rank: It carries a Zacks Rank of 3 currently.

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General Motors Company (GM) : Free Stock Analysis Report
 
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CNH Industrial N.V. (CNHI) : Free Stock Analysis Report
 
Nikola Corporation (NKLA) : Free Stock Analysis Report
 
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