Nikola Corporation (NASDAQ: NKLA) Faces Steep Decline and Negative Outlook, 4 weeks ago

Nikola Technical Analysis

Nikola Corporation (NASDAQ: NKLA) has seen a significant decline, with the stock closing at $0.33 on June 20, 2024, which reflects a drastic 31.46% decrease from the previous day. The stock dipped as low as $0.32, just above its 52-week low, and peaked at $0.43, well below its 52-week high of $3.71. The trading volume was exceptionally high at approximately 265.26 million shares, nearly three times its average volume of 88.99 million shares.

The RSI14 stands at 23, indicating that the stock is currently in the oversold territory. Moreover, both the 50-day ($0.59) and 200-day ($0.85) moving averages are significantly higher than the current price, suggesting a strong bearish trend. The MACD (3-month) at -0.021834 further confirms the negative momentum. The average true range (ATR) is at a high of 12.04, indicating substantial volatility.

With a lack of identifiable support and resistance levels, technical indicators paint a grim picture for NKLA in the short term.

Fundamental Analysis

Nikola Corporation's fundamentals present a challenging outlook. With a market capitalization of $447.12 million, NKLA faces investor skepticism as indicated by the news highlighting confidence issues in the company's ability to build necessary infrastructure. The recent announcements regarding a 1-for-30 reverse stock split and its impact on investor sentiment have further exacerbated the situation.

The negative EPS of -$1.06 and a non-ratio PE suggest that the company is struggling to achieve profitability. Additionally, the company's discounted cash flow (DCF) stands at -0.19, hinting at a negative intrinsic value. These factors collectively highlight the company's current financial instability.

Nikola The consensus from analysts is a "Buy" with specific targets ranging between $1 and $12. This discrepancy illustrates differing opinions on the stock's future trajectory, showing some optimism despite the present challenges.

Next Trading Day and Weekly Predictions

For the next trading day on June 21, 2024, the stock might experience increased volatility given the recent news and significant drop. The oversold RSI indicates a potential for a minor corrective bounce; however, the overall trend remains bearish. Looking into the upcoming week leading up to June 28, 2024, further declines are plausible unless new positive developments emerge, given the negative sentiment around the reverse stock split.

Intrinsic Value and Long-Term Investment Potential

The DCF analysis suggests a negative intrinsic value for NKLA, raising red flags for long-term investors. The challenges related to infrastructure development for hydrogen trucks and the reverse stock split imply significant hurdles for the company’s growth and stability. While analyst consensus tilts towards buying, the underlying fundamentals caution against high expectations over extended periods.

Overall Evaluation

Considering the technical and fundamental factors, NKLA should be categorized as a 'Sell' candidate at this time. The prevailing bearish technical indicators, combined with weak fundamentals and the negative impact of corporate actions on investor sentiment, endorse a cautious approach. Despite optimistic analyst targets, the current risks overshadow potential gains.

In conclusion, while short-term corrective movements are possible, the overall long-term outlook remains unfavorable unless substantial positive changes materialize.

Check full Nikola forecast and analysis here.