Here’s Why I Wouldn’t Touch Nikola Stock With a 10-Foot Pole

No longer all electrical car makers are created equal.

Danny Vena

There would possibly perhaps be rather a couple of excitement amongst investors within the electrical car condominium. Nikola (NASDAQ:NKLA) has been on the receiving cease of some of that bullishness, particularly after its manufacturing and licensing variety out Classic Motors (NYSE:GM). Even though that partnership stays intact, nonetheless, investors must unruffled mediate long and onerous about an Investment in Nikola stock.

On this episode of Fool LiveĀ that aired on Oct. 21, “The Wrap” guest host Asit Sharma and contributors Danny Vena and Daniel Sparks focus on why investors must unruffled mediate carefully ahead of investing in Nikola.

Asit Sharma: I bid this, guys, on yarn of Nikola’s had rather a shuffle over the closing month. Its CEO, Trevor Milton, resigned. It’s been beneath allegations of fraud, however hovering over all this has been this $2 billion variety out GM. On again, off again deal. Nikola, obviously, with out a factual product, at this point, needs this deal to battle via with GM, so it’ll license its originate and GM can device its electrical autos, its trucks. We had an announcement nowadays that GM must unruffled be . After I saw this morning, the stock used to be up about 12%. I know what took spot later within the day. However I’m new, and presumably we will breeze along with Danny Vena first. Danny, what are your thoughts? Is Nikola something that you proper don’t are attempting to peek at anymore? End you suspect perhaps this deal can unruffled battle via?

Danny Vena: What affect you mean “anymore”? I haven’t desired to peek at Nikola from the very initiating.

Sharma: There you breeze.

Vena: For me, it be famous that you illustrious already, they put now not yet luxuriate in a product out on the market. There would possibly perhaps be been so many u.s.a.and downs. I will throw an editorial within the chat right here in a minute. However I wrote a couple of month ago that, must you talking regarding the truth that Trevor Milton used to be accused in a transient list of making dozens of counterfeit statements, and exaggerating the extent of Nikola’s proprietary abilities. The reality that the Securities and Replace Commission notion that the allegations luxuriate in been viable ample that they must unruffled look at them. Now, Milton and Nikola both talked about, smartly, it used to be a hit job, however then at the moment after, Milton resigned, in reveal that gives me cease as smartly. If you peek at all of these components mixed, I don’t mediate someone of them necessarily is a deal-breaker. However you pile all of them collectively and I proper peek at Nikola and I proper bid, “I’m now not even . ” Whether or now not they catch to tackle GM, I’d now not touch that stock with a 10-foot pole.

Sharma: Wow, I luxuriate in that. Infrequently we asked for some commentary. I luxuriate in it when a Fool gives something, an notion that he or she is good with out a doubt certain on with rather a couple of conviction. Speaking of conviction, what’s your conviction on this yarn, Daniel?

Daniel Sparks: Yes, I’m going to let everybody down after Danny on yarn of I don’t note this very carefully, however proper speaking on the technical share of what you talked about, in long-established, I mediate that there would possibly perhaps presumably presumably very smartly be charge on these, however it be proper now not what I affect or what most Foolish investors affect. I’d proper help investors to with out a doubt mediate via the enterprise and realize it and proper create an assumption in accordance with that, even though there are factual technical indicators or debt balances or whatever. That’s proper my snappily notion on the technical share of your ask, however I don’t note in another case.

Sharma: Yeah, and I will proper give a transient wrap-up on this. I agree with both of you, the long-established sentiment that that you must presumably presumably be want got expressed. I mediate it be a factual object lesson for investors must you watch an organization that’s using on intellectual property, however the intellectual property is now not something confirmed over a truly long time, and also you are selling more of an belief than the leisure. You’re going to must luxuriate in some accomplice to actualize that attainable, and while you are already coming to market with issues, it be an organization finest refrained from, perhaps note the yarn for lots of quarters. I know many Fools are skeptical, these I’ve informally polled. I’m yet to receive someone who’s with out a doubt bullish on this company. I mediate, our long-established notion, advice is refrained from. It would peek factual, luxuriate in it has a good balance nowadays. Even though GM does cease up investing, it be going to be a onerous thesis to existing out over the long duration of time.

Asit Sharma has no position in any of the stocks mentioned. Daniel Sparks has no position in any of the stocks mentioned. Danny Vena has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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