Nikola (NASDAQ:NKLA) stock price continued its deep sell-off this week and hit an all-time low as concerns about its business grew. It fell to a low of $7.40 on Monday, bringing its year-to-date losses to nearly 72%. It has plunged nearly 98% over the past five years, taking its market cap from nearly $30 billion to the current $370 million.
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Will Nikola survive?
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The trucking industry is one of the most important globally as it facilitates all types of trade. It is also a highly consolidated industry, dominated by companies such as Daimler Trucks, Iveco e PACCAR.
The industry is going through major changes as concerns about carbon emissions continue. Some companies like Tesla have already launched electric semi-trucks that are used by companies like Pepsi and Walmart.
Electric semi-trucks have a big problem in that their battery packs are often very heavy, leaving little room for a large load. There are also concerns about range, especially in cold weather, and about the charging infrastructure in the country.
Therefore, many fleet companies have been a bit reluctant to purchase electric trucks, which are often more expensive than diesel ones. In addition, these trucks take much longer to charge due to their heavy batteries.
Nikola believes that hydrogen is the future of road transportation and has launched its own hydrogen-powered truck that it hopes will become a market leader.
Some analysts believe that green hydrogen could be a good replacement for diesel. In Nikola’s case, its truck has a maximum range of 500 miles, has 536 horsepower, and can refuel in less than 20 minutes.
Hydrogen trucks face several challenges. For customers, they are very expensive to buy: a truck costs more than $400,000. Even with government incentives, these trucks are more expensive than diesel ones.
The other challenge is that hydrogen is more expensive than diesel and there is a lack of refueling infrastructure. Nikola has started building refueling stations on busy routes like Ontario. , Alberta, and California. He also created HYLA, his complete refueling ecosystem.
Cash is a big problem
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Nikola has already started selling its hydrogen trucks. In the first quarter, it produced 43 trucks, generating revenue of $7.5 million and a net loss of more than $147 million, an improvement from the $169 million it lost in the same period in 2023.
Nikola will likely continue to suffer losses in the coming years as it ramps up its infrastructure investments. Although truck sales are expected to push revenues to $125 million this year and $429 million in 2025, losses will remain steep. Analysts expect losses per share to be $10.8 and $8.43 for the next two fiscal years.
Nikola’s challenge is that its balance sheet isn’t all that strong and it will likely need to raise cash this year or in 2025. Its cash and cash equivalents in the latest quarter came in at $345 million, down from more than $446 million in the same quarter a year earlier.
This means that the money will likely run out by the end of the year, forcing the company to seek additional cash.
Nikola Stock Price Predictions
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NKLA Chart by TradingView
The daily chart reveals that NKLA stock price is in free fall, which forced management to execute a reverse stock split this week. This split was necessary for the company to maintain its Nasdaq listing.
The stock has now fallen below the key support of $15.73, the lowest level in June 2023 and May of this year. It has remained consistently below the 50-day and 100-day exponential moving averages (EMA), which means the bears are in control.
Nikola stock price has also become heavily oversold, with the Relative Strength Index (RSI) moving to 22. The Money Flow Index (MFI) has also fallen below the neutral level of 50.
Therefore, the stock will likely continue to decline as dilution risks continue. This means it could soon drop to $5.
This article was translated from English with the help of AI tools, and then reviewed by a local translator.
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