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It is said that “imitation is the ultimate honest form of flattery”.
Tesla (TSLA) has enjoyed incredible good fortune over the past decade, going from a niche manufacturer from an expensive home-made electric roadster to a customer electric car manufacturer in fact, and a market capitalization of $275 billion. The return on shareholders who bought Tesla shares at the time of the IPO in 2010 and maintained them so far is 7,700% surprising!
No wonder such an achievement gives imitators who expect to reproduce this kind of appreciation.
The upstart Nikola (NKLA), which recently became a public company through a merger with a Special Target Acquisition Company (SPAC), captured the attention of daily speculators and investors who have taken their shares from a minimum of $10 to an intraday maximum of $93.99 and then returned closer to Earth in the next 4 months. NKLA is lately trading on the average diversity of $30 consistent with the stock.
All this volatility is evident. Who needs to introduce the “Next Tesla” land?
In addition to the atrocious scam on the company’s call (Nikola is the first call from the pioneer of electrical engineering and the name of the Tesla car manufacturer), NKLA turns out to be deliberately positioning itself, at least in terms of symbol, as the obvious heir. of the preferred automotive industry.
There’s a charismatic founder and president, Trevor Milton. The company plans to produce zero-emission semi-trailers and passenger vans. (NKLA cars will supposedly use hydrogen fuel generation and electricity). And recently, there is another attractive detail in the company’s first report as a public company: the revenue from “solar revenue.”
Elon Musk is mistakenly referred to as Tesla’s “founder,” though it wasn’t really the one who started the business. Musk joined the company founded through Martin Eberhard and Marc Teppering, although Musk was the CEO, the largest shareholder and the public face of the company for the maximum of its existence).
Nikola does not produce or sell any of the products he plans to market lately. Therefore, in its first profit statement, the sales and charge of the goods sold should be zero. Most of the “cash income” was only studies and prices of progression and sales, administrative and general prices. These two pieces accounted for the vast majority of the $86 million in losses reported through the company, but there is also a confusing detail: a gross profit of $6,000 over $36,000 of “sun cash in” along with “$30,000 in sun cash in prices.”
Of course, $6,000 is absolutely negligible in scope to $86 million in expenses, yet that has left sharp observers wondering, “What solar equipment?” Nothing in previous versions of the company or in its (very modern and well designed) refers to solar equipment.
Dig a little deeper into the 10-Q filed with the SEC (but obviously not in the official investor presentation published on NKLA’s investor relations website) and you’ll find that that revenue was attributed to “the provision of solar installation to the EXECUTIVE chairman, which are billed on the basis of time and materials.” Looks like Milton asked the company to purchase and install solar equipment in a non-public residence.
It doesn’t make much sense for a user who now generally values around $5 billion, basically through his 40% stake in NKLA, even having trouble managing a $36,000 solar facility through his (non-solar) company. Unless you’re close to raising that profit line to give investors the impression that the company is also active in the solar sector, just like Tesla with its SolarCity division.
If you’ve just read the most sensible of the profits and the CorporateArray, you can definitely get that impression.
It remains to be noted if NKLA will ever become as big as TSLA: lately there are only 18 indexed corporations with a market capitalization of more than $275 billion, the chances that it will fall are probably not great.
Nikola is an attractive and very funny tale for the day trading crowd right now, however, it is too early to call the company the “next” thing.
More news: it’s bigger than the iPhone! She may become the mother of all technological revolutions. Apple has sold only a billion iPhones in 10 years, however, a new advance is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market. Zacks has just published a special report highlighting this emerging phenomenon and 6 tickers to deserve it. If you don’t buy now, you can start in 2021. Click here to see the 6 trades
Want the latest recommendations from Zacks Investment Research? Today you can download 7 moves for the next 30 days. Click to view this loose report from Tesla, Inc. (TSLA): Nikola Corporation Free Inventory Analysis Report (NKLA): Free Inventory Analysis Report To read this article on Zacks.com, click here. Zacks Investment Research