The NKLA share price was fast approaching the kind of mania seen in electric vehicle maker Tesla (TSLA) going into the summer of 2020. The NKLA share price rose from under $10 before the COVID-19 pandemic struck in March to over $90 by June. This was off the back of the hydrogen fuelled vehicle maker becoming in vogue with investors. They sought plays which would be tuned into the need for a less polluting environment in the wake of the arrival of the respiratory disease centred virus.
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Clean energy boom for NKLA Shares
Initially, in 2020 NKLA shares proved to be one of the most high profile proxies to clean energy revival, one which was accompanied by an electric vehicle (EV) and SPAC (special purpose acquisition company) boom. Credibility was further added to NKLA shares by a subsequent deal made with General Motors (GM), with the rally the shares enjoyed briefly causing the market capitalisation to rise to greater than that of Ford (F).
The fundamental logic was that a maker of zero-emission heavy trucks had caught the zeitgeist, in the sense that in terms of the cost of these environmentally friendly vehicles was pitched correctly for the fleet market.
Nikola share price: the deal with GM
In terms of the deal with GM, it had obvious attractions, with a nominal value of $2bn for a 11% stake in Nikola. The negative side though was perceived as GM’s intervention being a development deal, one which would provide technological know-how which Nikola would purchase.
Unfortunately, by early September sentiment towards the Nikola Corporation share price was undermined by a short seller report suggesting that Nikola had misrepresented its technology and the likelihood of developing hydrogen powered trucks.
Nikola’s founder resigns
The resignation of NKLA’s founder and Chairman Trevor Milton only further hurt sentiment and the NKLA share price later in September. In fact, despite the negative publicity which impacted the NKLA share price, bears of the company may have missed or exaggerated various points.
For instance, GM stood by its due diligence on Nikola, with its former GM Vice Chairman having been the lead on the SPAC which took NKLA shares public. It is also the case that events at Nikola in terms of the recent newsflow are very much in accordance with companies at the pre-revenue stage.
NKLA Shares Q3 Update
The latest Q3 update from Nikola has shed light on where the company currently stands. It underlines the way that the commitment to assemble “the first Nikola Tre BEV prototypes” continues. Also key in terms of corporate governance, Steve Girsky was appointed Chairman of the Board in September.
To allay fiscal doubts Nikola said that it ended the quarter with a strong cash position of $908m, net of $15m in restricted cash. Milestones for Q4 include new collaboration partners and the rollout of hydrogen fueling infrastructure.
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How to trade shares with ATFX
Looking to trade Nikola shares and other major company shares? Open a live or demo account with ATFX to get up to speed. Start trading now to benefit from competitive spreads, high-quality trade execution, and no commission.
1. Register for an account or log in to your existing account
2. Open MT4 either on your desktop or mobile
3. Search for Nikola shares in the market watch or symbols window
4. Choose your position size
5. Hit buy or sell, and then confirm the trade
Nikola Corporation Share Price Daily Chart
The key question as far as NKLA shares is whether the retreat from the highs of the year through $90 has run its course? If this is the case then close to $18 we may be looking at a recovery situation. September’s $16 floor remains in focus as this was the low for NKLA shares in the aftermath of the short seller intervention. The assumption to make is that the longer $16 support is held, the greater the chance of an eventual recovery for NKLA shares.
Risk management
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