JPMorgan Slams Brakes on Nikola's Stock

Steph Willems
by Steph Willems
jpmorgan slams brakes on nikolas stock

Nikola, the electric vehicle startup with no functional or sellable product to back up its insane valuation, just got a reality check from JPMorgan. The Wall Street firm has warned investors of a pullback of the company’s sky-high share price — an action that pretty much guarantees that exact outcome.

After catapulting into the stratosphere two weeks ago, Nikola’s stock stands to sink by nearly a third, the bank warns. That result would no doubt be gratifying for those annoyed by overvalued companies who promise investors the sun, moon, and stars.

A fresh face on the Nasdaq, Nikola made headlines for wooing Wall Street with promises of battery- and hydrogen-driven semi trucks and a full-size EV pickup built with the help of an unnamed (nonexistent?) automaker. On Friday, June 5th, the company’s stock price hovered just under $36 per share. By the following Tuesday, Nikola Corp. was trading for just under $80.

Nikola now sits around $66, with a market cap of $24 billion, despite the company forecasting not a single cent of revenue in 2020 and production vehicles not arriving on the scene for another few years. An American assembly plant is projected for 2028.

In a note Monday, JPMorgan saddled the company with a “neutral” rating and a price target of $45, which is a 32-percent decline from Friday’s close. The early excitement can’t last, it said, adding that Nikola isn’t immune from the hurdles facing other startups.

That said, JPMorgan liked what it saw in Nikola’s plans, assuming the company can pull it off.

“NKLA is poised to disrupt the transportation industry with rapid deployment of hydrogen infrastructure and FCEV powered vehicles for use on long haul trucking routes, reducing CO2 emissions meaningfully and positioning the firm for a key role in the future hydrogen economy,” JPMorgan analyst Paul Coster and co. wrote in the note.

“The resulting business model could be compelling, however risks are elevated for this pre-revenue company, and the stock looks fully valued here, so we look for a pull-back or incremental positive developments to get more constructive.”

JPMorgan forecasts earnings before interest and taxes of $1.5 to $2.0 billion and nearly $14 billion of revenue “as early as 2027,” and a “strong cash flow” into the next decade.

While Nikola’s share price initially wobbled downward, it has since recovered, up a fraction of a percent over Friday’s close.

[Source: Seeking Alpha] [Image: Nikola]

Join the conversation
2 of 15 comments
  • Myllis Myllis on Jun 25, 2020

    It's not question of the lenght in Scandinavia, question is cost-efficiency. Nose feets means more weight, more fuel consumption, visibility and econimically it's waste of feets. Cab trucks can take more payload which means more money and it's huge diffrence if your payload is 40 ton than 115 ton when you look your check. Plus it's enviromentally-friendly drive maximum payloads. Finnish truckmaker Sisu launched last year hybrid Polar series, which means big drops of emissions, fuel consumption and still it's has 930hp. You should not disapprove cab models, before your have drive in a proper one.

  • Myllis Myllis on Jun 25, 2020

    Sisu videos timber Sisu, why Cab is so superior

  • EBFlex "EBFlex speaks more truth."It's sometimes a burden being right all the time.
  • MRF 95 T-Bird Add a couple of more body styles. A coupe with a vestigial rear seat like the BRZ along with a shooting brake version would appeal to a number of drivers who want something sporty but not a hatchback or crossover.
  • Theflyersfan It's the mother of all "ifs" - if Mazda gets the small rotary/hybrid combo going, I can see them using that in the next MX-5. Can they keep it under 2500 lbs and somewhat affordable? Not sure...this is why I don't run a car company! But if they want to replace it around 2025, and it's 2023 now, they need to get started very soon with some rumors and leaks to keep us going. But with the rest of their lineup going greener in next generations, and Mazda selling under 10,000 MX-5s per year, how does it really impact any average emissions and fuel economy ratings? If they can keep tweaking the Skyactiv-G engine for better fuel economy and fewer emissions, they should be able to get the NE generation using gasoline before being forced to go EV or hybrid with the NF. The mission of the MX-5 is light, affordable, open air fun and it's their halo car. And while I agree that EVs are going to be a much larger part of the future, the "all things by 2035 or 2040 or so on" edicts have "kick the can down the road" written in massive font size 1,000 written all over them. We'll be on gas for a while longer - just continue to eke more mpg out of what we have.All that being said, if they were to put the turbo Skyactiv-G engine in the MX-5 for 2024 and make it a Mazdaspeed model, I'd put a deposit on it right now. I love mine, but if it gets bumped up from 181hp to 250-275hp, it would be a flat out riot to drive.
  • Dot65699986 Making money online is more than $15k just by doing simple work from home. I received $18376 last month. It's an easy and simple job to do and its earnings are much better than regular office jobs and even a little child can do this and earn money. Everybody must try this job by just use the info on this page..... 𝐖𝐰𝐰.π°π¨π«π€π¬π­πšπ«πŸπŸ’.𝐜𝐨𝐦
  • Tassos extinct. It is a mickey mouse vehicle -toy that was always extinct for me. Its current interior room is fit only for small females. No wonder it is very popular with chicks. An Adult male can fit in, but can';t comfortably stretch on a longer trip, not to mention the non-existing trunk. The stupid car does not even have room for a young couple and their weekend luggage. So, it's JUST A TOY. When you grow up, you want something much more than a DAMNED TOY. Zoom-zoom?