The news that Tesla Semi is coming into the market has sent a series of shockwaves into the financial markets. However, the major company feeling the heat is a probable rival to Tesla’s truck, Nikola.
After witnessing a meteoric rise in its share price just three days after its initial public offering, shares of Nikola are now on a sharp reversal.
It would be recalled that Nikola (NASDAQ: NIKOLA) that made its debut on the stock market on June 4, after merging with special purpose vehicle company VectoIQ Acquisition Corp.
However, to the amazement of many, the company’s shares saw a massive surge with many traders and speculators placing huge amounts of money behind the company. Some analysts explained that many people were on one hand driven by the fear of missing out (FOMO) from another Tesla, which is now trading at $1,000 per share and also speculators who want to use the stock to make quick profits.
However, it seems the stock could be running out of luck with the latest announcements from Tesla Inc. (TESLA) that it is planning to ramp up the production of its own battery-powered trucks, called Tesla Semi.
A memo from Musk, first reported by Electrek, an online publication mostly focused on the Silicon Valley car maker, said that it was “time to go all out and bring the Tesla Semi to volume production.”
Musk went on to say that the commercial truck’s batteries and powertrain would be made at Tesla’s Nevada battery factory with other work likely taking place “in other states.”
The news has pushed Tesla’s stock to hit an all-time high price of $1,025 at the end of the trading hour yesterday.
During the last trading hours yesterday, the share of Nikola fell from an all-time high of $90 per share to $61 per share and pre-trading sentiments have shown that the shares will further slump as the trading day gets underway.
However, Nikola’s shares are also plummeting after other traders further study its prospectus. In its S-4 filing submitted before its listing, Nikola said that delivery of its trucks isn’t expected to begin until “2021 for our Nikola Tre BEV and 2023 for our Nikola Two FCEV, and may occur later.” Are we talking about the same Nikola Two FCEV trucks that Anheuser-Busch LLC agreed to lease? Will they really have to wait 3 years?
“Even if we are able to successfully develop and sell or lease our trucks, there can be no assurance that they will be commercially successful. Our potential profitability is dependent upon the successful development and successful commercial introduction and acceptance of our trucks and our hydrogen station platform, which may not occur,” the company said.
With zero revenue and profit, Nikola is already valued at around $30 billion. The next couple of days could further unearth its potential as a publicly-listed company.