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Nikola Corporation's Recent Developments Lead to Mixed Outlook

StockInvest.us, 2 months ago

Nikola Fundamental Analysis

Nikola Corporation (NKLA) showed robust performance on September 18, 2023, recording a 33.61% increase to close at $1.59. A key event was the recent announcement of a leadership change, with Mary Chan, a former president of the Global Connected Consumer group at General Motors (GM), assuming the role of COO effective October 9, 2023. The market seemed to react positively to this development as it could strengthen the company's strategy and execution in the electric commercial vehicle space. Another catalyst for the stock price surge may be Nikola's recent partnership with Toronto-based ITD Industries, aiming to expand its dealer network into Canada and tap into Canada's zero-emission incentives.

Despite these positive developments, Nikola's financials raise some concerns. The company's EPS stands at a worrying -$1.83, which is not encouraging for any potential investor. Furthermore, the PE ratio stands at -0.87, indicating the firm is not generating enough profit relative to its outstanding shares.

However, it is worth noting that the company's Discounter Cash Flow (DCF) stands at 2.12, suggesting the stock may be undervalued. A higher DCF is often an indicator that the company's considered value is higher than its current market price.

The company has a market capitalization of $1.36 billion, attesting to its appreciable size in the market.

Technical Analysis

From a technical perspective, Nikola Corporation's stock has an RSI14 of 64, indicating that it is slightly overbought. Traditionally, an RSI over 70 indicates overbought, and below 30 is considered oversold.

The 50-day Moving Average for NKLA stands at $1.81, which is higher than the last closed market price. The 200-day Moving Average, on the other hand, stands at $1.71, a bit higher than the last traded price, suggesting a bearish trend.

The MACD (3-month) is -0.39. This negative result implies a bearish market sentiment, although it's a lagging indicator and should be used in conjunction with other metrics.

Nikola NKLA's trading volume was 293.69 million, considerably above its average volume of 86.32 million. This rise is typically associated with high market interest in a stock often leading to more volatile stock prices.

NKLA has a support level of $1.44 and a resistance level of $1.82. These levels are likely to be crucial touchpoints acting as barriers that prevent the price of an asset from getting pushed in a certain direction.

Outlook and Recommendation

Based on the analyst consensus for NKLA, the stock currently has a buy recommendation. Among the analysts, there is a consensus of "Buy" with 1 analyst rating it as a "strong buy," 6 analysts rating it as a "buy," and 2 analysts recommending to "hold" the stock.

Fundamentally, the appointment of an experienced COO and the company's expansion into Canada are encouraging developments. However, the company's poor financial ratios and overbought RSI14 signal caution.

Technically, the 50-day and 200-day moving averages suggest a bearish market sentiment, while the heavy trading volume indicates high investor interest.

If investing in NKLA, one should monitor its capability in turning the tide around financials and translating recent developments into sustained growth.

Predicting the future stock price is inherently uncertain. However, taking into consideration the technical and fundamental analysis, the price may oscillate around the $1.6- $1.7 range for the next trading day on September 19, 2023. Predictions beyond a single day are highly uncertain and should be taken with caution. Further confirmed positive news could push the stock price upward breaching the resistance level at $1.82.

Given the above analysis, NKLA could be classified as a "Hold" due to the potential offered by their recent developments, while waiting for clear signs of turnaround in their financial performance. On the other hand, the current bearish technical indicators and fundamental risks associated with the company's financial state make it less attractive for immediate purchase. Investors should be vigilant and make decisions based on their risk tolerance and investment objectives.

Check full Nikola forecast and analysis here.