Sign InNikola Corporation's Stock Shows Potential for Recovery Despite Recent Setbacks
Summary
Nikola Corporation (NKLA) has faced challenges recently, including a vehicle recall, but the company's announcement of sufficient cash reserves until 2024 has reassured investors, leading to a slight increase in stock price and a Hold categorization with potential for future recovery, according to analysts (August 17, 2023).
Company Overview
Nikola Corporation (NKLA) is a leader in zero-emissions technology within the transportation industry. Recently, it has been affected by some negative events, such as voluntarily recalling 209 electric battery trucks due to a battery safety issue. However, the company presented a positive outlook by stating that it has enough remaining cash to operate until 2024. This announcement has somewhat alleviated the fears of investors who were worried about the company's cash shortage.
Technical Analysis
On August 16th, 2023, the last closing price of NKLA stock was at $1.94, up 1.57% or $0.03 from the previous day. The stock has touched a 52-week low and high of $0.52 and $6.76 respectively. The stock's recent high and low for the day were $2.07 and $1.80. The volume of shares traded was 46.61 million, which is below the average volume of 83.20 million.
From a technical perspective, the stock is currently trading near its 50-day moving average of $1.73 and its 200-day moving average of $1.89. The Moving Average Convergence Divergence (MACD), a three-month trend-following momentum indicator, is at 0.25. The Relative Strength Index (RSI14), a momentum oscillator, stands at 48, suggesting that the stock is neither overbought nor oversold.
The stock has support at $1.91 and resistance at $2.22. A close above the resistance level would put the next resistance at $2.48 into focus to reach the upper end of our one-week forecast price target.
Fundamental Analysis
Nikola Corporation has a market capitalization of $1.39 billion and -$1.4 earnings per share (EPS), resulting in a Price to Earnings (P/E) ratio of -1.39. This negative P/E ratio reflects the company's loss-making status. The outstanding shares stand at 716.79 million.
The discounted cash flow (DCF), which is a measure of the estimated value of an investment based on its expected future cash flows, is $2.47. This suggests that the stock is somewhat undervalued compared to the last closing price.
Analyst Outlook and Latest News
Analysts have a consensus rating of "Buy" for NKLA, with a median target of $10, and a high and low target of $12 and $8 respectively. This indicates a bullish outlook in the longer term. However, recent news of vehicle recalls could slow down short-term progress. The company's news of sufficient cash suggests stability and potential resilience in the face of these setback.
Price Prediction and Final Evaluation
Based on the technical indicators and analyst outlook, the predicted stock price for the next trading day, August 17, 2023, could see a slight increase in the range of 1-1.5% given the momentum. For the upcoming week, the price could likely reach close to the resistance level at $2.22 if there are no more negative news.
Considering Nikola Corporation's technical and fundamental analysis, recent news, and analyst outlook, the stock is categorized as a "Hold". This decision considers the recent negative news affecting the company and the importance of seeing how it manages these issues in the short term. Despite this, a long-term outlook following news of sufficient cash reserves and its consensus rating of "Buy" suggests potential for future recovery. This long-term confidence, paired with its current hold status, suggests it might be suitable for risk-tolerant investors.
