Nicola (NKLA) is establishing itself as the most volatile stock on the market. After nearly 40% rose on the news of the Nikola-General Motors (GM) deal, Nicola’s stock plunged quickly as a result of allegations of major fraud. These allegations of fraud are only exacerbating the growing number of issues surrounding Nicola. Even under the best of circumstances, Nicola will have an incredibly difficult time participating in the clean energy transport industry.
As a result of mixed news, Nicola has experienced a great deal of instability in the past week.
Data by vicharts
Questions begin to swirl
Nikola is one of the most controversial companies in the fast-growing clean energy transport industry. The company’s dubious claims about techno break break progress, the seemingly futile lawsuit against Tesla (TSLA), and missed deadlines have already attracted a party of Nikola suspects.
Recent allegations of fraud by Hindenburg Research have led to a sharp rise in skepticism around Nicola. Hindenburg Research claims that “extensive evidence gathered – including recorded phone calls, text messages, private emails and behind-the-scenes photographs – including dozens of false statements made by Nicola founder Trevor Milton.”
Hindenburg Research also said it had “never seen this level of fraud, especially in a public company of this size.” To make matters worse for Nicola, Citron Research came out in support of Hindenburg Research, congratulating Hindenburg Research, “in exposing what is clearly fraudulent.”
Nicola has been hit hard by these recent brief reports and is now at the top of the financial media, questioning the company’s credibility. Growing investor skepticism will make it difficult for Nicola to raise money and maintain its hype, which will be crucial to the success of both companies.
Issues with core technologies
Putting aside even potential fraud, Nicola’s prospects don’t look strong. Hydrogen Fuel Cell Technol which G, which Nicola seems to admit to many of his hopes, has undeniably lost in the fight against Battery Technol against G. While hydrogen fuel cell technology certain G may have an advantage in some markets, like heavy duty trucking, it is rapidly lagging behind battery technology.
Although Nicola also plans to invest heavily in battery electric vehicles, it is unlikely that the company will compete with Tesla’s preferences and the majority of other large automotive companies entering the industry. In fact, Nicola has only one vehicle left to deliver, making its current value of 12 12 billion more absurd.
It seems highly unlikely that Nikola will be able to compete against established BEV players like Tesla, even in the trucking market.
Source: Tesla
The GM deal raises even more red flags
Nicola recently struck a deal with GM in which it would give GM a 2 billion equity stake. GM, in turn, “will engineer, validate, homologate and build Nicola Badger and Fuel Cell electric vehicle variants.” Nikola will also use GM’s Hydrotech Fuel Cell Technol and G and last name battery systems.
Nicola’s GM deal seems to be a big win for Nicola, it really raises some red flags. Given the fact that Nicola previously claimed to be a leader in BEV and fuel cells, the company’s heavy reliance on GM’s technology is questionable. Nicola brings very little into the GM deal in terms of making the actual product.
Nicola’s reliance on GM’s technology further undermines Nicola’s credibility, given its earlier technological advancement claims. It is strange that Nikola would rely so much on GM’s technology when his own supposedly industry-leading. Nicola’s GM deal does little to allay fears surrounding the company’s long-term prospects.
The GM deal only casts more doubt on Nicola’s own technology.
Source: Nicola
Lack of infrastructure
The company lacks the infrastructure to compete properly, even under the prospect of Nikola ending up building industry-leading fuel cells and batteries. It could hold billions to create somewhat rival hydrogen fuel cell infrastructure.
Major hydrogen fuel cell companies, such as Plug Power (PLUG), have consistently failed to stay around the surrounding fuel cells. It seems incredibly unlikely that a relatively new upstart like Nikola will be able to do what decades old fuel cell companies have failed to do.
Nisola will have a more difficult time building a competitive battery infrastructure given Tesla’s presence. Tesla has built thousands of supercharger stations, each costing about 250 250,000. The number of supercharger stations will only increase rapidly in the coming years.
Given the fact that Nicola has yet to deliver a single vehicle, the prospect of competing in its battery space seems even more ridiculous. With Tesla and some of the world’s largest automotive companies prematurely investing billions in BEVs, Nikola has little chance of surviving in this market.
Conclusion
Nicola is highly valued at its current market capitalization of 12 billion. Allegations of fraud facing Nicola will put further downward pressure on the company’s stock. Moreover, Nicola’s core technology seems to be at best questionable, especially given the details of her GM deal. Investors would be prudent to avoid Nikola considering all the issues this company is facing.
Advertisement: I / We have no place in any of the stocks mentioned, and no plans to start any position in the next 72 hours. I have written this article myself, and it expresses my own opinions. I don’t get paid for it (except for finding Alpha). I have no business relationship with the stock mentioned in this article.
