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Nikola Corporation Faces Turmoil and Potential Turnaround Amidst Arbitration Settlement

StockInvest.us, 1 month ago

Nikola Company Overview

Nikola Corporation (Ticker: NKLA) is a company listed on the NASDAQ exchange that specializes in electric and hydrogen-powered heavy trucks. The firm is currently navigating some internal turmoil including arbitration proceedings with its founder and former CEO, Trevor Milton.

Technical Analysis

NKLA last closed at $1.00 on October 25, 2023, marking a decrease of $0.04, or -3.85%. The stock price fluctuated between $0.96 and $1.05 during the trading day. Its 52-week range was wider, with a high of $3.97 and a low of $0.52. The latest trading volume recorded was 62.90 million, below the average trading volume of 79.29 million.

The 14-day relative strength index (RSI14) stands at 28, signaling a potentially oversold condition for the stock. Moreover, with the Moving Average Convergence Divergence (MACD) being -0.05659 for the past three months, it indicates a bearish trend. The average true range (ATR) of 14.63 also notes significant volatility. Regarding the moving averages, the stock is trading below both its 50-day and 200-day moving averages, which are $1.32 and $1.57 respectively.

NKLA has a crucial support level at $0.91 and resistance at $1.04.

Fundamental Analysis

NKLA's market cap stands at approximately $985.20 million. The company's earnings per share (EPS) is reported as -$1.45, leading to a negative price-to-earnings (P/E) ratio of -0.69, indicating that the company is not yet profitable. The number of shares outstanding for NKLA is 985.20 million.

Nikola The recent development in the arbitration case against the former CEO, Trevor Milton, is expected to improve the company's financial position significantly. The panel awarded Nikola Corporation $165 million to offset costs and damages associated with previous regulatory investigations these proceedings have not only financially benefited the corporation but also generated significant news coverage which may increase investor attention.

The Discounted Cash Flow (DCF) value stands at $1.53, which is higher than the current trading price, suggesting the stock is possibly undervalued.

Analysts predict the high and low target for NKLA to be $12 and $8 respectively, giving it a median target of $10. The consensus recommendation for the stock is "Buy", with 1 analyst rating it a "strong buy", 6 rating it a "buy", and 2 rating it a "hold".

Outlook and Evaluation

Based on the above factors, the short-term outlook for NKLA is slightly bearish given the current trading position below the moving averages and with the RSI indicating oversold conditions. However, the recent arbitration settlement coupled with the fact that NKLA's Discounted Cash Flow (DCF) higher than the current price implies potential for recovery.

The next trading day might continue to exhibit bearish tendencies given the current technical analysis, and therefore the price for October 26, 2023, could potentially fluctuate around the support level of $0.91 and resistance level of $1.04. Over the upcoming week, the price may rebound as investors absorb the implications of the arbitration news, potentially pushing the price towards the DCF value of $1.53.

Clearly, NKLA is currently on shaky ground both financially and operationally, but the recent developments might offer a turnaround opportunity, especially considering its "Buy" consensus among analysts.

Consequently, weighing the present technical and fundamental strengths and weaknesses, Nikola Corporation is categorized as a Hold for potential investors. This is due to a combination of the short-term technical bearish signals coupled with the arrival of the $165 million awards from the arbitration proceedings. Long-term investors with a higher risk tolerance can consider this as a buying opportunity, but short-term investors should exercise caution and monitor how NKLA responds to these recent events.

Check full Nikola forecast and analysis here.