Sign InNikola Corporation (NKLA) Faces Bearish Trend and Uncertain Financials, Caution Advised
Summary
Nikola Corporation's stock price has dropped by 7.20% on August 24, 2023, and technical indicators suggest a bearish trend, while fundamental analysis reveals negative earnings per share and a negative price-to-earnings ratio, making it a risky investment; however, recent news indicates the company's commitment to hydrogen semi-trucks and an upcoming delivery of fuel cell trucks, which could potentially impact future stock performance, making it uncertain but possibly volatile in the short term.
Overview:
Nikola Corporation (NKLA) is an electric truck startup listed on the NASDAQ. On August 24, 2023, the company's stock closed at $1.225, marking a -7.20% change from the prior trading session. The firm has seen a relatively high trading volume at approximately 29.33 million shares, compared to an average volume of around 85.24 million shares. Its market capitalization stands at $1.14 billion.
Technical Analysis:
From a technical perspective, NKLA is listed below both its 50-day moving average (MA) of $1.8579 and its 200-day MA of $1.8307, indicating a bearish trend. Additionally, the stock's Relative Strength Index (RSI14) is at 13, suggesting it is currently oversold.
The Moving Average Convergence Divergence (MACD) for a three-month period is -0.15, which further reinforces the bearish bias of NKLA. The support and resistance levels are at $1.19 and $1.38, respectively.
Fundamental Analysis:
On a fundamental level, NKLA's earnings per share (EPS) stands at -1.27, which further explains the negative price-to-earnings (PE) ratio of -1.05. A negative PE ratio oftentimes signifies that investors are losing confidence in the company or that the company is not profitable. The firm has approximately 856.33 million outstanding shares.
Nikola has an upcoming earnings announcement scheduled for November 1, 2023. Analysts hold varied opinions on Nikola's investment potential, with some suggesting a target stock price between $8 and $12, the median target being $10. From a consensus perspective, the stock is labelled as a "Buy," with one "StrongBuy," six "Buy," and two "Hold" recommendations.
Recent news:
Recent news indicates that Nikola may continue its operations on the hydrogen semi-trucks, despite recalling faulty battery trucks due to risks of fire. Time will tell if this move can recoup the investor excitement observed in June 2020 when NKLA peaked at $93.99 per share. Moreover, Nikola's new CEO affirmed that the first long-haul fuel cell trucks are expected to be delivered to customers by the year's end.
Visualize future stock performance:
Considering all data above and the recent investments in green energy and electric vehicles, it is possible to predict that Nikola Corporation (NKLA) may see a price surge in the next trading day and perhaps in the following week. However, due to its recent financial performance and market conditions, the stock price may remain volatile. Therefore, it would be premature to assign a specific price estimate for the trading day of August 25, 2023, and the following week.
Evaluation of the Stock:
Given the technicals pointing to a bearish trend in conjunction with an uncertain financial situation, Nikola Corporation (NKLA) is likely a risky play for investors. Despite some positive news about the company's operations and the consensus "Buy" recommendation, the stock's dismal performance and the firm's underlying financials suggest caution is warranted. Therefore, for risk-averse investors, it may be prudent to categorize NKLA as a 'Hold' at least until after the upcoming earnings announcement on November 1, 2023. However, if the investor has a high-risk tolerance and believes in the company's long-term prospects, they might consider it a 'Buy'.
