Nikola Corp. Stock Falls Monday, Underperforms Market

Nikola Corp. (NKLA) stock took a tumble on Monday, underperforming the broader market. The electric truck maker's shares dropped by 3.73% to $3.75, while the S&P 500 index only fell by 0.65%. This decline comes amidst a challenging year for the company, with its stock price down by 94.6% year-to-date.

The company's struggles can be attributed to several factors, including quality issues and recalls, financial performance, and market sentiment. In August 2023, Nikola issued a recall for its battery electric trucks due to faulty battery packs, which caused several trucks to catch fire. This recall negatively impacted the company's reputation and stock price. Additionally, Nikola has reported significant losses in recent years, with revenue of $35.84 million in 2023, a decrease of -27.93% compared to the previous year's $49.73 million. Losses were -$966.28 million, 23.2% more than in 2022.



Analyst ratings and price targets have also contributed to the stock's volatility. As of November 11, 2024, the average analyst rating for Nikola stock from 4 stock analysts is "Hold," with a 12-month stock price forecast of $6.00, which is an increase of 426.32% from the latest price of $1.14. However, the stock has experienced significant price target and analyst ratings changes over time. For example, in August 2024, Michael Shlisky from DA Davidson maintained a "Hold" rating on the stock but lowered the price target from $12 to $4. In November 2024, Jeffrey Osborne from TD Cowen also maintained a "Hold" rating but lowered the price target from $10 to $4.

Despite these challenges, Nikola is projecting improvements in revenue and cost management for 2024. The company expects revenue from truck sales to total $150 million to $170 million, a significant increase over the $30.1 million in truck revenue for 2023. Additionally, Nikola projects to pare its losses, with a gross margin of negative 100% to negative 80% and operating expenses of $280 million to $300 million.



Investors should remain cautious, as the company faces numerous risks and uncertainties. The ongoing investigations by the SEC and DOJ against Nikola and its founder, Trevor Milton, may continue to weigh on the stock price. Additionally, the company's high level of short selling activity, with over 21% of the shares sold short, may contribute to downward pressure on its stock price.

In conclusion, Nikola Corp.'s stock price has fallen on Monday, underperforming the broader market. The company's struggles can be attributed to quality issues, financial performance, and market sentiment. While Nikola is projecting improvements in revenue and cost management for 2024, investors should remain cautious due to the company's ongoing risks and uncertainties. As always, it's essential to conduct thorough research and consider your risk tolerance before making any investment decisions.