Sign InSummary
Technical and fundamental indicators suggest that the outlook for Nikola Corporation (NKLA) on August 09, 2023, is likely to be stable or slightly decrease, with increased volatility and trading volume expected in the upcoming week, leading to substantial share price fluctuations; given the current market conditions and company-specific factors, NKLA is categorized as a 'Hold' with long-term investors advised to consider entry points provided by dips.
Technical Analysis
Looking at the price performance, Nikola Corporation (NKLA) last closed at $2.21 on August 08, 2023, marking a decrease of -7.53% or $0.18 from the previous trading day. The day’s price range was $2.10 at the low to $2.34 at the high. Its yearly performance ranged from a low point of $0.52 up to a high of $7.62.
The Relative Strength Index (RSI14) is positioned at 45, which suggests that the stock is currently neither oversold nor overbought. Meanwhile, the 50-day moving average stands at $1.56, below the closing price, whereas the 200-day moving average is $1.92, slightly below the last close, suggesting a downward trend in the long term.
The Moving Average Convergence Divergence (MACD), over a 3-month period, is at 0.48, indicating bullish momentum in recent times. However, with an Average True Range (ATR) of 18.61, the stock displays high volatility. The next support level stands at $2.10. Any break below this level might cause the stock to test the stop-loss set at $2.08. On the other hand, resistance is marked at $2.22.
Fundamental Analysis
Currently, NKLA has a market capitalization of $1.58 billion, with about 716.79 million outstanding shares. However, the latest earnings per share (EPS) reveals a negative value of -1.4 and subsequently a negative P/E ratio of -1.58, which warrants careful attention to the corporation's ability to generate earnings.
Considering the discounted cash flow (DCF), it stands at $2.74, which, being higher than the last close, indicates potential undervaluation.
The analyst consensus target over this period is $10, whilst the high and low targets stand at $12 and $8 respectively.
News Analysis
A recent news mentions that Nikolai Corporation’s Q2 earnings exceeded analysts’ expectations, which is a positive sign. In another positive development, cash and equivalents on the Balance Sheet nearly doubled sequentially. However, regarding the EV sector including Tesla, Nikola, and Nio, a broad weakness has been noticed, leading to a dip in share prices. In a move to increase liquidity, Nikolai has been approved to sell more stock.
Stock Price Prediction
Taking into account the current technical and fundamental indicators, the outlook for the next trading day (August 09, 2023) is likely to be stable or to slightly decrease, with chances to test the support at $2.1 if the market reacts to the broader selloff within the EV sector.
Looking ahead to the upcoming week, and considering the average volume of around 80.55 million shares in comparison to the 57.87 million shares traded on the last trading day, the trading activity is expected to increase. Therefore, with increased volatility and trading volume, we may see substantial share price fluctuations.
Final Evaluation
Given the current market conditions and the company specific factors, we categorize Nikola Corporation (NASDAQ: NKLA) as a 'Hold'. While the company's recent Q2 results and the prospect of increased liquidity are positive, the broad weakness in the EV sector, high volatility, and uninspiring technical indicators may weigh down the stock in the short term. The company's financial fundamentals also raise concerns. Nevertheless, long-term investors could consider the entry points provided by the dips with an eye on the analyst consensus target of $10.
