(Investor’s Business Daily)
Nikola (NKLA) lost a major deal with waste collection company Republic Services (RSG), just weeks after General Motors (GM) ditched a proposed manufacturing tie-up. Nikola stock dived.
The troubled electric truck startup announced Wednesday that a pact with Republic Services to develop electric garbage trucks has ended, after the companies determined it would involve “longer than expected development time and unexpected costs.”
Originally announced it August, the deal involved 2,500-5,000 electric refuse trucks for Republic Services, one of the nation’s largest recycling and solid waste providers. The deal was the single largest order of its kind in the waste industry.
Nikola still plans to begin deliveries of the Tre battery-electric semitruck in the U.S. in 2021. It also plans to break ground on its first commercial hydrogen station next year.
Wedbush analyst Daniel Ives called the move another blow to Nikola’s credibility with investors, and a “tough pill to swallow” for the bulls.
“In a nutshell, this is a gut punch for investors that were hoping this monster order was a potential paradigm changer for Nikola,” he wrote.
“Given the tidal wave of bad news for Nikola over the last few months, this was not the news that investors wanted to see under their Christmas tree,” Ives added.
He backed an underperform rating on Nikola stock, with a price target of 15.
Shares dived 9.7% to 15.18 in Wednesday’s stock market trading. Nikola stock is mired under the 50-day line which undercut the 200-day average early in November, according to MarketSmith chart analysis.
GM stock rose 1.5% and Republic Services dipped 0.1%. Other EV stocks also sustained losses, including 2.3% for Tesla (TSLA) and 2.9% for Nio (NIO).
Nikola stock plunged in September after short-seller Hindenburg Research accused the company of fraud and lies. Founder Trevor Milton exited Nikola after the Department of Justice and Securities and Exchange Commission began probing those allegations.
Another setback followed in December, after General Motors significantly scaled back a proposed partnership, dropping plans to make an electric pickup truck for Nikola. It still intends to supply hydrogen fuel cells to Nikola. That pact, first announced in September, was widely seen as a stamp of approval from GM.