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Nikola Corporation Stock: Analysis Shows Potential Growth Despite Risks

StockInvest.us, 2 months ago

Nikola Fundamental Analysis

Nikola Corporation (NKLA), a player in the electric and hydrogen trucks market, last closed at 1.395USD on September 25, 2023. It saw a price change of 0.15 USD, which represented an 11.60% increase. Despite fluctuating between a low of 1.2USD and a high of 1.44USD, the price is still significantly lower than the year's high of 4.096USD and above the year's low of 0.521USD.

Nikola's market cap stands at $1.19 billion with an impressive volume of 81.73 million, slightly below the average volume of 91.48 million. The stock's EPS of -1.35 USD and PE ratio of -1.03 suggest that Nikola is currently not profitable.

The company aims to raise $40 million in new funding through the sale of convertible notes, which could potentially enhance the company's liquidity but poses a dilution risk for stockholders. Despite this, the consensus among analysts, indicated by a hold of 2, buy of 6, and strong buy of 1, is to purchase the stock.

Technical Analysis

The Relative Strength Index (RSI14) of 57 indicates the stock is neither overbought nor oversold. The stock's 50-day moving average is 1.79 and its 200-day moving average is 1.68; currently at 1.39, it is trading below these metrics, suggesting a bearish trend.

Nikola's Moving Average Convergence Divergence (MACD) over a three-month period is -0.212096, implying a bearish trend, with a support level at 1.3USD and a resistance at 1.51USD. The Average True Range (ATR) stands at 15.52 indicating high volatility.

Nikola Regarding analysts' price predictions, the target high stands at 12USD, significantly above the current trading price, while the target low is 8USD. The consensus target and median target are both at 10USD.

Price Prediction

Given the technical analysis and prevailing market conditions, Nikola's stock may continue to show volatility in the short term. In spite of the current downtrend, this analysis suggests that the stock might witness an increase before the next trading day, influenced by investor sentiment following news of the company's fundraising efforts.

Final Evaluation

In terms of fundamentals, Nikola Corporation has noticeable cash flow of $1.92 and has shares outstanding amounting to 856.33 million. Despite the projected dilution risk owing to the sale of convertible notes, the strong consensus among analysts favors buying the stock. As the company is not profitable yet, high volatility and fluctuations are expected, and investors should be cautious.

Based on the technical analysis, although the stock shows bearish signs in its moving averages and MACD, RSI indicates that it might not be overvalued. Provided the high target prices predicted by analysts, the upcoming period might present a good opportunity for growth.

Combining these perspectives, while acknowledging its risks, Nikola Corporation's stock can be categorized as a 'Buy'. The current price appears to present an opportunity for investors considering the analysts' higher target prices. However, this recommendation must be weighed against the company's unprofitability and high volatility.

Check full Nikola forecast and analysis here.