Nikola Corporation (NASDAQ:NKLA) Facing Intense Scrutiny

Nikola Corporation (NASDAQ:NKLA) Facing Intense Scrutiny

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Nikola Corporation
Ticker: NASDAQ:NKLA
Price: $32.83

Nikola News

Last week, electric vehicle rival Nikola (NASDAQ:NKLA) stock sank like a rock. Short-selling firm Hindenburg Research published an explosive report alleging all sorts of suspicious activity at Nikola. Hindenburg’s report made various claims about CEO Trevor Milton’s background and resume.

It also alleged that Nikola doesn’t develop its own proprietary technology. And, on several occasions, Nikola purportedly deceived investors with stunts, such as rolling a prototype truck down a hill to make it look like the vehicle was cruising on its own battery power. Hindenburg also raised pointed questions about the technical competence of key Nikola employees.

Nikola stock had surged to $50 on Sept. 8 when it announced a partnership with General Motors (NYSE:GM). However, following the Hindenburg report, NKLA stock collapsed to just $36, down nearly 30% in two days.

You might be wondering why this matters to Fisker. Several reasons. One, if the claims of fraud are true, it will be a major black eye for the electric vehicle industry. Nikola had a huge market capitalization and had attracted a loyal retail shareholder base. Once burned, twice shy; if Nikola was in fact deceptive, companies like Fisker will face a much steeper credibility challenge with investors.

In relation to that, there’s also the issue that both companies went public via a special purpose acquisition company (SPAC). SPACs allow companies to sidestep the usual scrutiny companies deal with in an initial public offering. In 2020, companies have presented SPACs as a better and cheaper way to go public. But SPACs used to be associated with shady and unscrupulous executives.

And after Nikola, other companies that went public via SPAC, like Fisker, may face intense investor skepticism.

Fisker Failed Before

An interesting part of the Nikola story is that its founder, Milton, allegedly ran some unsuccessful companies in the past and hid this fact from future investors. Fisker also stumbled previously, though to that leader’s credit, nothing about it was kept from shareholders.

Henrik Fisker founded Fisker Automotive in 2007, and it debuted its first luxury plug-in EV in 2008. Deliveries started in 2011, however the company ultimately only produced a few thousand vehicles. Fisker ran into various problems including defective batteries from its supplier, a hurricane that wrecked the supply chain, and management disagreements over its growth strategy. The company ultimately ran out of money and stopped operations by 2014.

While it sold off its assets to outsiders, Henry Fisker retained the Fisker brand and started anew. After years of development, Fisker is now ready to present its new and hopefully improved vehicles to market. And based on the designs and technical specifications, it looks like Fisker will be a strong contender in the rapidly emerging EV space.

However, given the past business failure, Fisker starts with a red flag that rival EV companies don’t have to deal with.

Business Summary

Nikola Corporation, formerly VectoIQ Acquisition Corp., specializes in battery-electric and hydrogen trucks and powersports vehicles.

The Company provides zero-emissions transportation and infrastructure solutions.

Its product lineup includes battery-electric and hydrogen-electric class 8 commercial trucks, off-highway vehicles and watercraft.

The Company’s products include Nikola One, Nikola Two, Nikola Tre and Nikola Badger.

Its powersports include Nikola NZT, Nikola Reckless and Nikola water adventure vehicle (WAV).

Price Performance

Relative Valuation

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 39.52.

The projected upper bound is: 45.86.

The projected lower bound is: 19.15.

The projected closing price is: 32.51.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 20 white candles and 30 black candles for a net of 10 black candles.

A bearish harami occurred (where the current small black body is contained within an unusually large white body). During an uptrend this pattern implies an end to the rally as the bulls appear to have exhausted themselves.

During a downtrend (which appears to be the case with NIKOLA CORPO ORD) the bearish harami pattern is bullish as the bulls appear to be gaining strength as the bears weaken.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 17.5647. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 13 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 42.50. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -116.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 3 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 2 period(s) ago.

Rex Takasugi – TD Profile

NIKOLA CORPO ORD closed down -2.960 at 32.830. Volume was 138% above average (neutral) and Bollinger Bands were 55% narrower than normal.

Open     High     Low     Close     Volume
33.000   34.660   32.060  32.830    52,984,908
Technical Outlook
Short Term:        Oversold
Intermediate Term: Bullish
Long Term:         Bullish
Moving Averages: 10-period     50-period      200-period
Close:           38.28         40.73          25.62
Volatility:      275           204            174
Volume:          55,377,000    26,805,224     10,489,330

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

NIKOLA CORPO ORD is currently 28.1% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term.

Our volume indicators reflect volume flowing into and out of NKLA.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on NKLA.O and have had this outlook for the last 21 periods.

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