Why Nikola Stock Is Rolling Downhill Today

Negotiations with GM remain unsure. Within the intervening time, a lockup expiration looms.

What took role

Shares of electrical-truck launch-up Nikola (NASDAQ:NKLA) opened sharply lower on Wednesday, on rising concerns about doable insider sales when a lockup length expires next week, and on continuing questions about the predicament of the company’s partnership with Traditional Motors (NYSE:GM).

As of 10: 30 a.m. EST, Nikola’s shares were down about 13.7% from Tuesday’s closing brand.

So what

Exhibiting on CNBC’s Infected Money program on Tuesday evening, CEO Tag Russell acknowledged that whereas Nikola remains in GM’s electrical-automotive batteries and hydrogen fuel cells, the companies fill yet to forestall a deal. Russell confirmed that Nikola’s discussions with GM are serene ongoing, nonetheless acknowledged that he could perchance not touch upon the command of these discussions.

Nikola and GM launched in September that GM would supply batteries and fuel cells for Nikola’s electrical vehicles, and fabricate and invent Nikola’s electrical Badger pickup, in substitute for a $2 billion stake in Nikola. Nevertheless the deal — or not lower than, the valuation of the inventory integrated in GM’s stake — was as soon as thrown into search recordsdata from after a short-vendor’s allegations tanked Nikola’s inventory and led to the departure of founder Trevor Milton.

A silver Nikola Badger, an electric pickup.

A revamped Nikola-GM deal could perchance or obtained’t encompass the launch-up’s Badger pickup truck. Image supply: Nikola.

Nikola’s inventory jumped on Tuesday after GM withdrew from a Trump administration suit looking out out to void California’s fuel-economic system standards, which could perchance be stricter than the federal authorities’s. That pattern, along with the accelerated electrical-automotive efforts that GM launched closing week, regarded to imply (to some investors, not lower than) that a take care of Nikola could perchance be drawing stop.

Russell’s feedback suggested that things are serene up in the air. 

Now what 

There’s any other field on investors’ minds: About 161 million Nikola shares held by insiders which had been “locked up” for the explanation that company went public in June could be “unlocked” as of next Tuesday, Dec. 1. Of display, and of explicit field to auto investors: Milton holds 96.1 million of these shares, and it is not clear whether or not he plans to retain them indefinitely. 

In case you beget Nikola since you cherish the prolonged-length of time doable, there could be not any unexpected motive to sell. Nevertheless be ready for the chance that the inventory could be pretty volatile over the next couple of weeks.


John Rosevear owns shares of 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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