There was a lot of hype building into EV truck maker Nikola’s (NKLA) first earnings report since becoming a publicly traded company.
The lack of any meaningful earnings to report – Nikola is pre-revenue at least until the first of its EV trucks hit the market next year – means the talk ahead of Tuesday’s earnings call centered around updates to the company’s progress.
Investors were hoping for string of partnerships and positive developments to push shares higher. Coming into the earnings call, NKLA stock had been on a rally and up by 19% over the past week. In the end though, despite the positive tone, there were no gasp inducing reveals and no extended surges. In fact, following the announcement, shares dropped nearly 10%.
So, what did we learn regarding Nikola’s progress?
There should be an OEM partner announcement for the Badger – Nikola’s electric pickup truck – before the end of the year. The 89,000 Badger registrations are currently just an indication of interest and do not amount to actual deposits. Additionally, production on the battery electric vehicle (BEV) Tre semi-truck should commence in 4Q21.
During the quarter, the company broke ground on its Coolidge, Arizona manufacturing facility, with phase 1 set for completion by next year’s fourth quarter. Additionally, investors were told the Ulm, Germany manufacturing facility will be able to produce 10,000 Tre trucks a year when completed.
It remains to be seen whether Nikola can deliver, but in the meantime, RBC analyst Joseph Spak expects the stock’s rollercoaster ride to continue.
Spak noted, “We think 2Q20 results likely came with fewer major announcements than investors had been expecting/hoping for, so we wouldn’t be surprised to see some weakness in shares. We maintain our $46 PT and believe there will be volatility +/- that level, often moving with sentiment given less reliance on trad’l fundamentals/ valuation metrics. That said, we could see shares trade towards our PT as mgmt set the stage for several major 2H20 milestones, which are likely to re-energize the narrative.”
The aforementioned price target implies upside of 32%. However, Spak’s Sector Perform (i.e. Hold) rating stays as is. (To watch Spak’s track record, click here)
According to Spak’s colleagues, the pullback could present an opportunity, as the average price target of $56 present possible upside of 60%. Overall, the analyst consensus rates the stock a Moderate Buy based on 2 Buys and Holds, each. (See Nikola stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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