Here’s Why Nikola Stock Bounced Back Wednesday

Some comments from a natty industrial engine firm in regards to the hydrogen economic system gave Nikola a opt at the moment time.

Howard Smith

Key Aspects

  • Brief-term present points triggered merchants to sell the day gone by.
  • The promise of Nikola’s know-how is quiet longer-term speculation.

What came about

After shedding almost 10% the day gone by from its quarterly monetary replace, shares of Nikola (NASDAQ:NKLA) bounced back Wednesday morning. As of 11 a.m. EDT, shares had been up 5.7%, after having jumped as noteworthy as 7.4% earlier. It appears merchants are turning their point of interest from negative comments linked to shorter-term points to the longer-term probably raised in one other earnings dispute the day gone by. 

So what

Nikola announced the day gone by that provide chain disruptions triggered it to lower projections for battery electrical semitruck manufacturing, and therefore revenue targets, for this year. However the firm’s long-term plans accumulate a broader adoption of hydrogen gas-cell electrical vehicles, and industrial vitality massive Cummins (NYSE:CMI) centered on the growth of a hydrogen economic system in its earnings conference call the day gone by. 

Rendering of Nikola truck at hydrogen fueling station.

Portray source: Nikola.

Now what

Cummins, acknowledged for being a first-rate in diesel-powered engines, commented that in its 2nd quarter, it entered true into a partnership making an attempt for to “bustle the growth of replace opportunities … promoting the inexperienced hydrogen cost chain.” It also stated it started testing a hydrogen-gas inner combustion engine.  

Nikola has stated from its inception that it seeks to develop a hydrogen gas economic system, and it told merchants that it quiet plans to start up construction on its initial commercial hydrogen space and/or a centralized hydrogen manufacturing facility by the cease of this year, as successfully as philosophize new partnerships to reach hydrogen infrastructure. In June, Nikola purchased a 20% interest in a easy hydrogen mission underneath construction in Indiana. 

Cummins’ comments in its earnings conference call that it helps “hydrogen as a decarbonizing answer for transportation and replace” seemingly gives merchants some self assurance that Nikola’s plans are mirrored by one other main player in the transportation sector.

This article represents the idea of the writer, who could presumably well per chance disagree with the “reliable” suggestion space of a Motley Fool top fee advisory service. We’re motley! Questioning an investing thesis — even one among our own — helps us all mediate seriously about investing and assemble choices that wait on us became smarter, happier, and richer.

Howard Smith owns shares of Nikola Corporation. The Motley Fool recommends Cummins. The Motley Fool has a disclosure policy.”>

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