Finance
Why Nikola was up over 25% at one point today
Shares of the manufacturer of electric and hydrogen-powered trucks Nikola (NASDAQ:NKLA) rose more than 26% at one point today before posting a 16% gain as of 1:13 PM ET.
The rally was fueled by the company’s announcement of second-quarter hydrogen truck deliveries, which easily exceeded expectations. With Nikola’s past troubles and loss-making financials pushing the stock to very low levels, it’s no wonder the good news has led to a turnaround.
72 hydrogen deliveries
In the second quarter, Nikola reported 72 HYLA Class 8 hydrogen trucks to wholesalers. That was well above the high 60 mark it had forecast in its previous guidance for the quarter. In addition, Nikola acquired a new customer Walmart Canada, which had purchased vehicles for the first time, while existing customers increased their purchases through Nikola’s dealer network.
The 72 deliveries nearly double the first quarter’s 40 and brought Nikola’s total deliveries since the beginning of the year to 112. Nikola CEO Steve Girsky said: “We are firmly in the field and continue to secure our first-mover advantage in the zero-emission class .8 trucks in North America, as well as with our HYLA hydrogen tank solutions.”
It’s good news for Nikola and the prospects for hydrogen trucks. The long-haul trucking industry may be difficult to electrify due to weight considerations, but hydrogen is a zero-emission fuel that produces only water as a byproduct. That said, hydrogen takes energy to produce, so it is only a zero-emissions fuel if it is produced with green energy.
Furthermore, according to a press release from Nikola last month, the retail price of hydrogen is currently $32 per kg. That is high and far exceeds the costs of producing hydrogen. However, Nikola believes that as more hydrogen trucks hit the road and infrastructure is developed, these costs will drop.
Nikola still has a lot to prove
Today’s stock population is somewhat encouraging, but can probably be attributed to short-coverageas 20% of Nikola’s shares were sold short on June 14. The company was also forced to conduct a 1-for-30 stock promotion. reverse stock split last month, when its share price fell below $1 against the US dollar Nasdaq regulations.
Fundamentally, the company burned through more than $130 million in the first quarter alone, but only has about $345 million in unrestricted cash on its balance sheet. That means Nikola needs to quickly become more profitable or raise money in a high-interest rate environment. So despite the current surge, investors should wait until the dust clears and Nikola is on a sustainably profitable path before investing.
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Billy Duberstein and/or his clients have no positions in the stocks mentioned. The Motley Fool holds and recommends positions in Walmart. The Motley Fool has one disclosure policy.
Why Nikola was up over 25% at one point today was originally published by The Motley Fool
