Nikola (NASDAQ: NKLA) stock price has plunged hard recently, erasing most of the gains it made earlier this year. It has retreated to a low of $0.6125, its lowest level since March 19th, and is about 46% below its highest point this year.
Nikola has been a cash incinerator and a big loss-maker to its investors. It has burned over $3 billion since its inception in 2014. Investors who had $10,000 in the company at its peak in 2021 now have just $65.
May 7th earnings are crucialNikola Corporation has underperformed its competitors severely. As I wrote recently, truck makers like Iveco, Daimler Trucks, and PACCAR have all surged to their record highs amid high demand from around the world.
Nikola has made some progress as it moves away from its past crises. Last year, the company raised millions of dollars using convertible bonds and share sales to boost its balance sheet. As a result, the company ended the quarter with $466 million in cash and equivalents, up from $364 million in Q3.
The company has also simplified its operations. It ended its European ambitions by ending its partnership with Iveco. Also, it is no longer targeting the entire American market. Instead, it is targeting California, which has put transport mandates to promote EV and hydrogen trucks.
Most importantly, the company has started manufacturing and delivering its HYLA trucks. It produced 43 trucks and sold 40 of them in the first quarter. The other three trucks were to be delivered in April.
Further, Nikola has made progress in its fueling stations. In the first quarter, it launched its refueling station in South California and another one in Alberta. California has also continued to offer incentives for low-carbon trucks. Earlier this week, we reported that the state was offering these incentives to Mullen Automotive’s trucks.
Therefore, May 7th will be an important day for Nikola investors as the company will publish its financial results. These figures will provide more information on Nikola’s performance and its cash burn.
The average estimate is that Nikola’s quarterly revenues will come in at $15.80 million. They also expect it to point to a $23.9 million revenue in the second quarter. Analysts expect the company’s revenues will be $169 million and $481 million in 2024 and 2025.
The challenge for Nikola is that it is still burning huge sums of money. It had a net loss of $153 million in the fourth quarter after shedding $425 million in Q3. Some of these losses were because of its BEV recall that cost over $300 million. Nikola should work to prevent a recall for its hydrogen truck.
Therefore, an increase in losses will likely lead to another cash call later this year, which will lead to more dilution. This is a big risk to be aware of.
There is also a risk in the hydrogen prices, which have remained at an elevated price. A report by S&P Global showed that California’s retail hydrogen price has been rising and is more expensive than diesel, a move that will discourage many buyers. Besides, hydrogen trucks are more expensive than diesel ones.
Nikola stock price forecast
The weekly chart shows that the NKLA share price has crashed to an important level that coincides with its lowest point in May 2023. There are signs that the stock has formed a double-bottom pattern whose neckline is at $3.70.
In technical analysis, this double-bottom is one of the most bullish signs. Therefore, May 7 will be crucial in determining the next price action. Weak results will likely lead to more downside and a move below the double-bottom level at $0.533.
The alternative scenario is where the double-bottom pattern works as it should, leading to a strong rebound as we saw earlier this year.
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