Nikola Motors (NASDAQ: NKLA) is a volatility seesaw. Today’s positive press release saw Nikola bulls fling the bears into the air. However, alarming criticisms from Hindenburg research, sexual allegations against Trevor Milton, and a GM fallout could see the bears regain control of the seesaw. Thus, today’s article will look to break down and simplify the bearish and bullish Nikola stock forecasts.
Table of contents
- Bullish Nikola stock forecast
- Nikola bears still have valid arguments
JP Morgan back the bullish Nikola stock forecast
Despite the negative publicity around Nikola, JP Morgans’s bullish stance is triggering a rally on Wall Street.
It seems the GM-Nikola deal is the most important catalyst that is keeping the bulls around. If the deal were to fall through, then the stock price would plummet. JP Morgan analyst Paul Coster is basing his bullish argument on this GM shoestring concept. Coster currently has Nikola as overweight and with a price target of $41, which is a 70% gain. Some pessimists might instantly label the price target as ludicrous. Especially considering the scathing criticisms from Hindenburg Research and the recent sexual allegations against Trevor Milton. Coster has a rationale argument for his stance. Coster views “the GM partnership as the most important near term catalyst“. In which if successful would see Nikola climb towards the $41 price target.
However, if GM and Nikola fail then JP Morgan will probably become more bearish. Because according to Coster, “GM’s withdrawal would be a major collateral blow to Nikola’s time-line, margin structure, and truck brand“. Overall, JP Morgan is optimistic because the GM deal symbolises hope. However, if it falls through Coster will likely pull the overweight and $41 price target.
Nikola Motors Press Release
Furthermore, JP Morgan is not solely responsible for today’s rally. The Nikola management injected bullish optimism after their press release today reaffirmed its dedication to reach key milestones. These achievements included: Completing the prototype for and testing the Nikola tray battery-electric semi-trucks by the end of 2020. Followed by customer availability starting in the fourth quarter of 2021. Another key milestone was announcing a hydrogen station network partner by the end of 2020. Accompanied by the plan to establish its first commercial hydrogen station by the end of Q2 2021.
Overall, the bullish reaffirmation from JP Morgan and Nikola’s forward-looking press release saw the bulls drive a 10% rally. However, the rally would likely vanish if Nikola misses these milestones or the GM deal fails.
Should the core bearish flaws worry investors?
Last week Wedbush analyst Dan Ives slashed his price target down to $15 from $45, marking a realised loss of 37% from its current price today. Dan Ives advised that the departure of Nikola’s founder Trevor Milton alongside the displayed excellence of Tesla’s battery technology has influenced their recent downgrade. Although still positive on Nikola’s hydrogen cell ambitions, Wedbush believes the timing and execution are definitely a concern.
The on-going Hindenburg conflict sparked an eye-watering sell-off, as the firm released fraudulent claims directed at Trevor Milton and Nikola. Hindenburg criticised the EV innovator for “deceiving” the general public and shareholders of their battery capability. It is important to remember Hindenburg are short-sellers, and many have put this down to market manipulation. Whether these accusations are true or not, the resultant damages will continue to plague investor confidence in the coming months. However, since the initial sell-off, the stock has bounced back tremendously well. Suggesting stronger than expected long term consensus from retail investors.
All eyes are on the current General Motors partnership which will swing the investor sentiment dramatically. Bullish price targets are banking on the success of this partnership which would offer serious upside potential for long-term investors. However, the validity of Nikola and its intentions have definitely been thrown into the spotlight. The coming months will be a mammoth task for Nikola’s executive management and board of directors as they attempt to fill the void Trevor Milton has left upon his departure.
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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, and Tyger Fitzpatrick, Senior Manager, and Founder of YIG.