Nikola (NKLA): A Revolution, or a Scam?If you like this analysis, please make sure to like the post!
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In this analysis, I'll be providing an in-depth analysis on Nikola Corporation (NKLA), also recently known as the Tesla (TSLA) killer.
I'll provide an overall understanding of what Hydrogen vehicles are, what Nikola is trying to achieve, and the questions that have been posed against the company and its founder, Trevor Milton.
Hydrogen Vehicles
- Hydrogen vehicles are known to have the following advantages: heavy duty fast fueling, long range support, less weight, and renewable zero-emission.
- NKLA places a special emphasis on its heavy duty fast fueling, using hydrogen full cell technology
- Theoretically, hydrogen gas is ignited, then reacts with the oxygen in the air, and release its energy through an explosion, with the only waste product being water.
- A hydrogen fuel cell is a device that takes in hydrogen and oxygen, generating electricity.
- However, the reality is not as good as it sounds
- Based on Volkswagen's research, hydrogen vehicles demonstrate a lower efficiency rate compared to electric vehicles.
- And while NKLA has recently claimed that they are reaching a cost level of $2-3 per kilogram of hydrogen, research by ARK invest demonstrates that hydrogen costs, provided by NKLA's numbers, demonstrate that they would be 3 times more expensive than electricity
What Nikola Corporation (NKLA) is trying to achieve
- NKLA is looking to be the Tesla-killer, providing not only hydrogen vehicles, but also sustainable energy sources and infrastructure based on hydrogen
- They seek to offer affordable hydrogen based energy solutions through economies of scale
- Their motor lineup consists of the following models: Nikola One, Nikola Two, Nikola Tre, Nikola Refuse, which are all large trucks, and Nikola Badger, a pick-up truck.
Questions Posed about NKLA
- All great successes have stories of hate along the way. However, some serious questions that are posed against the executive chairman Trevor Milton, and the company.
- Research conducted by the Hindenburg research suggests that NKLA is almost absolutely worthless, and that its founder is a complete con-artist
- They demonstrate that Trevor Milton misled partners into signing agreements by falsely claiming to have extensive proprietary technology
- How Nikola staged a video showing their semi-truck cruising on a road at a high rate of speed.
- A spokesman for Volvo spin-off Powercell AB, a hydrogen fuel cell technology company that formerly partnered with Nikola, called Nikola’s battery and hydrogen fuel cell claims “hot air”.
- As proven by Ark Invest as well, despite Milton's claims that Nikola will reduce hydrogen costs by 81%, they have failed to do so
- The "in-house" designs from NKLA are licensed from third-parties
- Milton, through dozens of outright lies, was able to form partnerships with some of the largest legacy auto companies in the world in their desperation to catch up to Tesla’s EV leadership status
- Milton also cashed out $70 million around the IPO and amended his share lock-up from 1-year to 180 days.
- This means that if he gets laid off, his equity awards immediately vest and he is entitled to collect $20 million over two years.
- Most of these skeptical views towards the company revolve around the central idea of the company not having any substance, and the chairman's ethically questionable decisions.
Technical Analysis
- As this stock has only been listed on the market for a few months, leaving very little price action history
- First of all, we can see that the stock skyrocketed close to $100 at all time highs, mostly driven by investors' hype that this would be the next Tesla (TSLA)
- However, prices since have dropped, touching the historical support at $29.08
- Another strong support lies at $14.88, but given the stochastic indicator demonstrates signs of the stock potentially being oversold temporarily, we might see a technical bounce take place
Conclusion
While ambitious, Nikola Corporation and the mastermind behind the company seem to lack any substance. Hydrogen vehicles are definitely an area worth exploring, but it's also important to realize that the attention Nikola has received was due to its being marketed as 'the next Tesla' rather than its cutting edge in-house hydrogen fuel cell technology. There are a lot of inconsistencies in the claims made by the company, and potentially unethical decisions made by the executive chairman himself. As such, I believe that this company is more likely to be 'the next Theranos' rather than a Tesla Killer.
