Why Nikola Stock Sank 21.6% in February

The electrical automobile stock is now down 82% from its 52-week excessive.

Keith Noonan

What took dwelling

Shares of Nikola (NASDAQ:NKLA) fell 21.6% in February, in step with data from S&P Global Market Intelligence. Deliver-dependent shares observed a steep sell-off at the slay of the month, and the electrical automobile (EV) firm’s valuation sank amid volatility for the broader market. 

NKLA Chart

NKLA data by YCharts

Electric Automobile shares indulge in generally build up stellar beneficial properties over the closing year, and Nikola stock has climbed roughly 44% all thru the stretch despite newest volatility. Rising Treasury bond yields blended with considerations about valuations within the tech sector brought on tall sell-offs at the slay of February, and the EV specialist’s share designate has been compelled amid the pullback. 

A Nikola semi-truck EV.

Image source: Nikola.

So what

Nikola stock reached a excessive of roughly $94 per share closing year, spurred on by anticipation for a most likely partnership with GM and excitement for the overall EV dwelling. However, the partnership with GM wound up being scaled back substantially, and Nikola stock’s subsequent performance has been underwhelming when compared to excessive-flying category leaders including Tesla and NIO

Whereas Nikola’s beneficial properties indulge in lagged those of high EV gamers, its valuation remains extremely speculative for the rationale that enterprise has yet to lift vehicles in foremost numbers. Nikola has a market capitalization of roughly $6.5 billion and is valued at roughly 400 cases this year’s anticipated gross sales, and it’s far not aesthetic that its stock has been compelled as the market has reassessed relate-dependent valuations.

Now what

Nikola stock has persisted to glide early in March’s Trading. The firm’s share designate has dipped roughly 8.7% within the month so far. 

NKLA Chart

NKLA data by YCharts

The final EV dwelling will seemingly stare explosive relate thru the following decade and previous, and Nikola’s focal point on semi-truck designs and diversified industrial vehicles might perhaps perhaps abet it faucet into relate in those categories. However, the change is changing into increasingly aggressive, and Nikola’s first-mover living within the industrial automobile area of interest has yet to consequence in tall revenue. The outlook for its Badger pickup truck also remains unclear. So, whereas Nikola has as of late viewed tall sell-offs and trades smartly off its 52-week excessive, the stock remains a foul Investment.  

This article represents the belief of the creator, who might perhaps perhaps perhaps also disagree with the “official” advice dwelling of a Motley Fool top fee advisory provider. We’re motley! Questioning an investing thesis — even one in all our bear — helps us all judge severely about investing and originate decisions that abet us develop to be smarter, happier, and richer.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.”>

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