Nikola Suffers Credibility Doubts On Wall Street As EV Deal Hangs In Balance

(Investor’s Business Daily)

Wall Street reacted coolly a day after Nikola (NKLA) said manufacturing partnership talks with General Motors (GM) continue while delivering quarterly results. Nikola stock fell.

The Nikola earnings call focused on the “linchpin EV partnership” with GM, Wedbush analyst Dan Ives wrote in a note Tuesday. While investors were hoping for a progress update on the GM deal, “that did not happen.” Instead, Nikola merely told analysts that talks were continuing.

“With Nikola a pre-revenue company at this point, it’s all about the management team laying out the execution, timetable and build-out strategy for its electric vehicle/hydrogen fuel cell roadmap,” Ives said.

Ives called Nikola a “prove me” story ahead. “It’s about regaining investor credibility one step at a time,” he added, backing an underperform rating and 15 price target on Nikola stock.

Similarly, analyst Joseph Spak of RBC Capital Markets noted there was “no update” on the GM deal. While management sought to shift the focus back to NKLA’s underlying business opportunity, “credibility is tough to flip overnight,” he said. Spak, who rates Nikola at sector perform, lowered his price target to 19 from 21.

In a regulatory filing late Monday, Nikola and its founder Trevor Milton also disclosed Justice Department subpoenas tied to allegations of fraud and lies by short-seller Hindenburg Research.

Electric-Car Stocks: Nikola Earnings
Electric-truck startup Nikola reported a net loss of 31 cents and an adjusted loss of 16 cents. Analysts expected a third-quarter net loss of 35 cents a share on sales of $50,000. There are no year-ago numbers. Nikola also reported $918 million in cash.

Nikola said in the earnings release that GM talks are continuing, but didn’t say much else on the subject.

It promised to “provide further updates when appropriate or required.”

In the third quarter, Nikola’s plans for a Tesla Cybertruck rival and a proposed GM partnership took backstage to the abrupt exit of its founder, amid serious fraud and sexual assault claims

Nikola stock, a hydrogen fuel-cell play as well as an electric truck play, debuted in March after a blank check merger. It has taken investors on a wild ride since. Talks continue with GM on a manufacturing partnership, but either side could terminate the deal if it isn’t closed by Dec. 3.

Nikola stock fell 3.2% to close at 18.03 on the stock market today after closing down 4.8% Monday. GM stock rose 5.4%, while Tesla (TSLA) stock shed 2.6%.

Workhorse Earnings
Also on Monday, electric truck company Workhorse Group (WKHS) lowered fourth-quarter production guidance while reporting earnings.

Workhorse, which makes EVs for last-mile deliveries, on Monday posted a net loss of $84.1 million. That compared to a loss of $11.5 million a year ago. It had an operating loss of $9.8 million vs. a loss of $5.6 million a year ago. No per-share numbers came with the company’s earnings release. It posted revenue of $565,000 vs. $4,000 a year ago. Analysts were expecting a net loss of 11 cents per share and revenue of $400 million, according to Zacks Investment Research.

In addition, Workhorse warned Q4 production will be “substantially lower” than prior guidance of around 300-400 vehicles. It cited battery supply issues and staff quarantines due to the coronavirus pandemic. The company also announced that Pitchard Companies, a commercial vehicle distributor, has ordered 500 all-electric delivery vans.

Workhorse stock reversed losses to edge up 0.2% Tuesday. Shares rose nearly 10% in a volatile session Monday.

In June, Workhorse announced “late-stage milestone certification” for its electric delivery vans. The U.S. Postal Service and UPS (UPS) are potential customers. The company also has a 10% stake in Lordstown Motors, which is producing electric pickup trucks from an old GM plant.

Kandi Reports A Loss
Early Monday, China’s Kandi swung to a net loss of 3 cents a share from earnings of 23 cents a share a year ago. Revenue dropped 40.9% to $18.7 million. EV parts sales fell 67.4%, offset by a 51.6% gain in off-road vehicle sales. Analysts were expecting a net loss of 11 cents per share on sales of $21.6 million.

Kandi stock dived 22.7% Tuesday, undercutting the 50-day line. Shares lost 17% Monday. While Kandi recently brought two affordable, compact electric vehicles to the U.S., initial response was underwhelming.

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