Sign InNikola Corporation's Stock Shows Struggles, Analysts Suggest Hold in Face of Market Challenges
Summary
Nikola Corporation's stock showed a downward shift on September 22, 2023, with limited volatility, and is currently trading below its moving averages, indicating struggles, but analysts are still bullish with a consensus Buy rating and a potential upside, although caution is advised in the short term due to negative indicators and recent challenges. (Date of analysis: September 22, 2023)
Technical Analysis
Nikola Corporation's (NKLA) last close was at $1.25 on September 22, 2023, indicating a downwards shift of -0.05 (-3.85%) from the previous close. The day's trading displayed limited volatility, with a high of $1.30 and a low of $1.17. The stock's 52-week high and low are $4.10 and $0.52 respectively, signifying movement within a wide trading range.
The stock's trading volume of 72.60 million was below the average volume of 91.41 million, suggesting decreased trader interest on the specific day. On a technical note, NKLA appears to be struggling, currently trading below both the 50-day moving average of $1.81 and the 200-day moving average of $1.69.
The RSI at 52 indicates neutral momentum, which is neither overbought nor oversold. The MACD displaying a figure of -0.25, indicates a short-term bearish trend. Also, the Average True Range (ATR) at 17.18 implies notable daily price volatility.
As of now, the stock is trading between support at $1.19 and resistance at $1.30.
Fundamental Analysis
NKLA's market capitalization stands at $1.07 billion and the company has 856.33 million shares outstanding. The stock exhibits a negative EPS of -2 and a negative PE ratio of -0.62, which denotes the company is not currently profitable.
Looking at the analyst recommendations, analysts are indicating a consensus "Buy" with a median target of $10, suggesting a significant upside potential from the current price. The discounted cash flow (DCF) stands at $1.78 per share, higher than the current price.
The news highlights the company recently disclosing a convertible-debt offering, resulting in a pullback in the share price. The balance sheet of the firm appears to weaken, and this could exacerbate in the instance of further downward price movement.
Expected Performance and Final Evaluation
Based on the technical and fundamental analysis, NKLA's price is anticipated to remain flat or slightly decrease in the next trading day, considering bearish short-term indicators. However, with upcoming earnings announcement on November 1, 2023, this could catalyze shifts in market sentiments and price movement.
Although the stock has been underperforming lately, based on the bullish analyst consensus, it does have significant long-term upside potential. The current price below the discounted cash flow suggests the stock is undervalued, assuming the model used to calculate the DCF is accurate.
However, the potentially bearish indicators such as the negative EPS, PE ratio, and the recent move to issue convertible debt could add downward pressure. Therefore, despite long-term potential, investors should be cautious in the short term.
Final Conclusion: Hold. Although analysts seem to suggest a buy, immediate challenges make it sensible to hold on to the current position while monitoring future developments and earnings announcement closely.
