Nikola’s (NASDAQ: NKLA) price action is mimicking that of a rollercoaster. The NKLA stock forecast is changing weekly, making it difficult for investors to understand the underlying sentiment. It seems NKLA’s volatility provides an El Dorado of riches to some investors. In contrast, others are left at the side of the road. Thus, today’s article will simplify the Nikola madness and provide our readers with educated commentary on 2020 forecasts and beyond.
Table of contents 1. Why was NKLA bullish and bearish this week? 2. Who owns the Nikola charts for 2020 - bulls or bears? 3. Where do investors see NKLA in 2021?
Summary of the Nikola rollercoaster this week
Nikola came out of the gates storming this week after announcing its GM partnership on Tuesday. The ten-year alliance will see “GM engineer and manufacture Nikola’s Badger pick up truck and provide the battery system for Nikola’s semi-trucks in exchange for 11% ($2 billion) of Nikola.” Instantly the bulls came charging in numbers, which revived the dying EV stock by 41%. However, the bullish sentiment was over in a heartbeat as the bears, more specifically short-seller Hindenburg Research, drove a 35% decline. Nikola is now trading below its pre-GM announcement. Let’s breakdown these competing arguments.
NKLA stock forecast for the rest of 2020 – are the bulls or bears calling the shots?
The bullish Nikola narrative is driven by NKLA’s existing partnerships and upcoming catalysts. First, Nikola holds a strong influence in the electric truck garbage sector. For example, Nikola recently signed a deal to provide 2,500 electric garbage trucks to Republic Services. The partnership validates the Nikola brand, leading to possibly more electric garbage truck deals in the future (opinion not advice). Especially as “Nikola is a leader in the battery-electric space”. Second, the GM partnership, to a certain extent, restores investor confidence that the Badger will come to fruition. In which the Badger hype could act as a bullish driver for Nikola.
Furthermore, Nikola’s upcoming catalysts are bolstering the bullish argument. For example, according to CFO Kim Brady, Nikola reveals the TRE prototype at the end of September. “Also, by the end of 2021, Anheuser-Busch InBev (NYSE: BUD) is expected to receive Nikola’s two hydrogen fuel cell trucks.” Overall, according to the bulls, the existing partnerships validate Nikola’s value proposition, and the upcoming catalysts suggest possible futures surges.
Nikola stock forecast – bearish argument
Nikola bears are shouting stock manipulation and deceptive catalysts. Initially, some investors thought the bears were trying to force Nikola down to profit off their shorting positions. However, Hindenburg’s recent research report gives the bears a significant amount of weight. The report’s most alarming allegations include:
- The first Nikola truck test drive was fake as it involved toeing the truck up a hill and pushing it down
- Nikola did not develop their own inverter but bought a Cascadia inverter off the shelve and covered the logo with masking tape.
Considering Hindenburg has email and photographic evidence, it is safe to say that their argument stands at the moment. However, the real anchor in the bearish argument is that Trevor Milton is yet to debunk the allegations (refer to the Twitter post below). Ultimately, suggesting that there could be truth to the accusations (opinion not advice).
Im calling it now. Nikola is done. Trevor is exposed. If the research report wasn't true, he could have destroyed it by simply releasing unedited video of the test. He didn't. Instead, he lawyers up. Begining of the end. https://t.co/hIGFDEMZJ5
— Fred Lambert (@FredericLambert) September 11, 2020
Nikola stock forecast 2021
Before I begin, I am obliged to remind our viewers that this is not advice but rather investment commentary from extensive research
Nikola is becoming an emotional stock (opinion not advice). Some bulls are adamant that the 2022 Badger is not artificial hype but symbolises real growth potential. In contrast, the bears scream stock market manipulation and fake catalysts. Reading those sentences alone could have activated some internal bias depending if you are a bear or a bull. The smartest way to trade Nikola leading into 2021 would be to push the stock price and emotions aside and play both sides or leave the stock alone completely. (opinion not advice)
Because Nikola’s volatility is likely to increase from here. Especially, as upcoming bullish catalysts and out of the blue partnerships could prop up the stock. At the same time short-sellers and a stock market crash could wrench NKLA down in a heartbeat. Overall, the bears and bulls should own the charts at different points. Thus, making absolute predictions that Nikola is bearish or bullish come 2021 is a dangerous claim.
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by Patrick McLoughlin, Senior Manager of YIG.