Why Nikola Stock Is Higher Today

Is the GM deal at closing going down?

What came about

Shares of electrical-truck beginning up-up Nikola (NASDAQ:NKLA) had been sharply elevated on Tuesday afternoon. While the corporate itself had no recordsdata to checklist, the inventory could well furthermore honest had been transferring up on rising optimism about Nikola’s stalled partnership with Trendy Motors (NYSE:GM).

As of 2: 30 p.m. EST, Nikola’s shares had been up about 16.6% from Monday’s closing heed.

So what

Here are some issues that will be contributing to Nikola’s inventory-heed rally. 

  • An cease to election uncertainty. It now appears very certain that Joe Biden received the election — and that the Trump administration will now proceed with a transition. The cease to uncertainty is bullish for the economy in general, with out a doubt — and Biden’s election is bullish for electrical autos, because the Democrat has promised policies to tempo electrical automobile (EV) adoption. 
  • COVID-19 vaccine recordsdata. It appears seemingly that we are going to hold an authorized COVID-19 vaccine soon. While this could think quite rather a lot of months (a minimum of) to obtain everyone inoculated, an cease to the pandemic now appears to be in gape. Over again, that is bullish for the economy in general.

Both of these are factors in the inventory market’s enormous rally this day. But there is one more that will be utilizing Nikola particularly. 

  • GM switched facets in a fight over gasoline-economy laws. GM had been a celebration to a Trump administration lawsuit searching for to overturn California’s gasoline-economy requirements, that are stricter than federal requirements (and stricter than the administration would treasure). But GM mentioned on Tuesday that it be withdrawing from the suit, becoming a member of competitors Ford Motor Firm, Honda Motor, and Volkswagen in supporting California’s requirements. 

That announcement came only some days after GM presented that it is miles accelerating its EV vogue programs. While Nikola wasn’t phase of closing week’s announcement, traders could well furthermore honest be hoping that GM’s renewed point of curiosity on EVs will pressure it to shut the grand-anticipated partnership take care of Nikola. 

A prototype Nikola Badger, an electric pickup truck

Will GM assassinate Nikola’s Badger electrical pickup despite the whole lot? Shoppers appear to think the chances of a deal are rising. Image source: Nikola.

Now what

That partnership deal, wherein GM would offer batteries and gasoline cells for Nikola’s heavy autos, and would engineer and assassinate Nikola’s Badger electrical pickup, has been stalled since Nikola’s inventory heed plummeted in September after a brief-seller’s checklist accused the corporate of exaggerating its technology.

The deal makes loads of sense for both parties, and I believe it’ll occur sooner than the December closing date. Alternatively it hasn’t came about yet, and auto traders eyeing Nikola ought to quiet trade sparsely unless all of us know more.


John Rosevear owns shares of Ford and General Motors. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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