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Is Nikola ready to take on Tesla on NASDAQ?

Published by: Antonio Alagna
September 12, 2022 9:00 am

As of now, trading at a price of $5.48 per share, listed on the NASDAQ GS, Nikola has a name on the market. It is in the GS tier of NASDAQ, GS meaning the Global Select Market.

What is NASDAQ GS?

The Global Select Market differs from the Global Market in that it is more exclusive and must meet more stringent financial and liquidity requirements. The Global Market Composite is examined by the Nasdaq Listing Qualifications Department every October to see if any of its stocks have changed enough to qualify for listing on the Global Select Market.

What is Nikola?

Nikola Corp. offers infrastructure and transportation solutions with zero emissions. It creates battery- and hydrogen-electric vehicles, electric vehicle drivetrains, vehicle parts, energy storage systems, and infrastructure for hydrogen refuelling stations. Trevor Milton founded the business, which has its main office in Phoenix, Arizona. At the beginning of 2020, it went public. Days after completing a reverse merger with VectoIQ Acquisition Corp., which had previously traded as VT IQ on the Nasdaq, in early March, its shares more than doubled. Since then, its stock price has experienced some wonderful increases and decreases.

Nikola’s Leadership

Trevor Milton established Nikola in 2015. Since the last name of the renowned inventor Nikola Tesla was already occupied, he chose to name the company using the first name instead. Milton led  Hybrid Systems as CEO before starting Nikola. Milton held the post of CEO up until the company merged with VectoIQ, at which point he became executive chair. Mark Russell took over as CEO in his place. Russell, who has more than 20 years of expertise in the manufacturing sector, joined Nikola as president in 2019. Milton resigned on September 20, 2020, following the claim in the Hindenburg Research report that he had misled investors regarding Nikola's technology. He faced fraud charges earlier this year.

Latest News – Changes in Hierarchy Announced

The company's commercial and energy initiatives will be advanced by the two leadership changes Nikola announced on August 30. Carey Mendes, the current Global Head of Energy Finance, has been promoted to President, Energy, while Pablo Koziner, the current President of Energy & Commercial, has been designated President, Commercial. These positions are now in effect. Beginning on January 1, 2023, Michael Lohscheller, who was recently named President of Nikola Corporation, will be the next Chief Executive Officer and will be responsible for managing Koziner and Mendes and will lead all of Nikola's sales activities, including business development, sales, service, dealer network and charging solutions. 

Nikola’s Business Model – How do they make money?

Nikola intends to produce vehicles that make use of hydrogen fuel cell technology, in contrast to electric vehicle manufacturer Tesla Inc.  which uses electric vehicles that are recharged by plugging them in. By fusing hydrogen that has been stored in a tank with airborne oxygen, hydrogen fuel cells generate electricity. Vehicles powered by hydrogen fuel cells offer advantages comparable to those of pure electric vehicles, but with faster charging and greater range. Elon Musk, the inventor and CEO of Tesla, has called hydrogen fuel cell vehicles “mind-bogglingly stupid,” but many top auto executives think they have a better long-term future than all-electric vehicles. As of now, Nikola is selling its Semi Truck Tre-Bev which is completely electric, and is claimed by Nikola to be “A reimagined cab over for short-haul, metro-regional applications.” Two more semi-trucks, Tre-FCEV and TWOFER, will be available in 2023 and 24 respectively.

The Company’s products include Nikola One, Nikola Two, Nikola Tre and Nikola Badger. Its power sports include Nikola NZT, Nikola Reckless and Nikola water adventure vehicle (WAV).

The company's operations don't just involve making zero-emission hydrogen-electric trucks. Nikola intends to construct hydrogen refuelling stations across North America for use by those vehicles. At its filling stations, Nikola intends to use solar electricity, which will be supported by grid power. The process of “hydrogen electrolysis,” which entails passing electricity through water to separate it into oxygen and hydrogen for fuel, will subsequently be carried out using the power. In addition to trucks, the company intends to produce off-road 4×4s and jet skis that run on hydrogen fuel cells technology.

Nikola to Raise $400M in Stocks Sale

On Tuesday, August 30, Nikola Corp announced that it may sell shares to fund up to $400 million as the maker of electric trucks seeks to increase production despite growing expenses. The business, which is dealing with rising labour cost and raw material expenses as a result of the Russia-Ukraine War and decades-high inflation, stated that it is under no obligation to sell any shares and that it may halt sales at any time. Nikola delayed its annual shareholder meeting numerous times to gather additional proxies in support of the proposal, and earlier this month won investors' consent to increase the number of authorised shares from 600 million to 800 million. Nikola has signed up Citigroup Global Markets as its sales agent.

A Brief Look at the Financials

Nikola is not currently profitable and most certainly won't be for a few years. As part of a pilot testing program, the business had only just delivered its first two Tre battery electric vehicle (BEV) trucks in December 2021. However, the corporation did announce in late March 2022 that it had started producing its Tre BEV trucks at its Coolidge, Arizona, factory. Additionally, it declared that it will ship between 300 and 500 semi-trucks this year. It continues to anticipate waiting until the second half of 2023 to start manufacturing its hydrogen fuel cell electric vehicles (FCEVs).

Nikola has only made a modest amount of money over the past five years, including $95,000 in 2020, from small-scale solar installation contracts. In October 2020, the company stopped providing solar installation services. Nikola generated a net loss of $690.4 million in 2021 that was attributable to its common stockholders due to costs and expenses that were much higher than its revenues. Net losses for the business in 2020 and 2019 that were attributable to common stockholders were $384.3 million and $105.5 million, respectively.

So is Nikola a Buy, Sell or Hold?

Nikola has received a market consensus from analysts as a HOLD stock. Right now, it’s too speculative to buy and although business seems to be stabilising, its stock is still too expensive relative to its near-term growth.

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