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Nikola shareholders (NASDAQ: NKLA) had a crazy race this week. On Tuesday, General Motors (NYSE: GM) announced a $2 billion investment in the truck manufacturer, bringing the inventory up by 40%. Stocks fell by 12% on Wednesday when they were short. Distributor Hindenburg Research accused the company of being “an ocean of lies. “And on Friday, NKLA inventories dropped by 16%.
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According to his research, founder Trevor Milton had been cheating on investors for years, at one point, driving an uphill truck to be shot as if driving on a flat road. So what do investors deserve to do? Well, I’m going to reveal a little secret about the electric vehicle industry (VE): it’s been built on a series of lies.
Most start-ups are, and electric cars are a particularly ambitious case due to their intense capital needs. While software vendors might have to raise millions of dollars to create a marketable product, electric vehicle brands have to raise billions. obtaining cash from investors.
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So, if you’re comfortable making an investment with street vendors, Nikola gives you the most productive way to locate the next Tesla (NASDAQ: TSLA). Founder Trevor Milton will now take over after GM’s big investment. But if the concept of enriching an egocentric founder makes you goose bumps, there are other tactics for making money. So how are you a mercenary?
Readers will know that I love the electric vehicle industry, it’s so compelling that oil market strategists have adjusted their expectations for decades.
However, maximum startups also have to lie to investors long enough to get capital. Few others had the air of mystery that Jeff Bezos exerted on investors to get Amazon off the floor (NASDAQ: AMZN). in 1997 just in time. Two years later, in 1999, the Wall Street Journal published “Amazon. bomb” in the canopy of its barron magazine. “Unfortunately for Bezos, Amazon is now entering a phase where investors will be less willing to rely on their mystery air and easier in terms of answers,” the Wall Street Journal writes.
Elon Musk worked on the same challenge at Tesla. “He’s done some amazing things, but at the same time, he’s not just a shooter,” said Darryl Siry, Tesla’s former senior vice president of sales and marketing. “It’s a distortion box” really and it’s hard. It provides the facts that correspond to the narrative you want.
Today, Nikola is discovered in a similar situation. La société a afirmé ‘ plusieurs repeats the technology disposer “électriques ‘ batterie et’ pile ‘ hydrog’ne électriques”, a composant assez de tout véhicule électrique.
But did the company have the technology? Probably not.
In Tuesday’s deal with GM, Nikola revealed that it would depend on GM’s Ultium battery formula and Hydrotec’s mobile fuel generation, fuel technologies GM had developed for its 20 new electric vehicle models to be marketed until 2023. or not, it doesn’t matter.
So why would GM settle for the deal? This is because GM will get a much-needed marketing touch for its EV endeavors. The legacy automaker is already in position for electric cars after Tesla for now, thanks to its understated Chevy Bolt. But marketing has been a problem: The company only sells 5,000 bolts in a quarter.
Not that a society benefits e-parties, but this is the time when it does.
The agreement with GM also gives Nikola an indispensable credit in the box of hydrogen fuel mobile phones. And that could make Nikola the next Tesla. even more mobile fuel stations. It’s a virtuous cycle.
“This news is a great spice for Nikola and strengthens credibility not only for his Badger production . . . but also for his mobile hydrogen fuel ambitions and his vision for semi-trailers going forward,” said Wedbush analyst Dan Ives. . There have been many skeptics around the ambitions of Nikola and its founder Trevor Milton in the next few years, now thrown out the window with the wonderful CEO making a major strategic gamble. “
Here’s the tricky part. Nikola now has a market capitalization of $19 billion with virtually no revenue, even Tesla promoting 22,000 cars at the time it reached that valuation.
But the use of moderate estimates provides a broader picture of what is at stake in nikola’s stock valuation.
To succeed in its current price of $50, Nikola would want to accumulate profits at $24 billion until 2029, approximately the same expansion rate that Tesla controlled between 2010 and 2019. Tesla, however, has built its own factories, hindering its ability to grow. Nikola, meanwhile, will have gm’s production size. If Nikola can have $30 billion in profits with an EBITDA margin of 18. 3% through 2029, his fair price increases to $72, an increase of 43%.
In June, the founder of Nikola, 38, was replaced by veteran chief operating officer Mark Russell. He has also been strangely busy taking cash from the company he founded, he has publicly told investors otherwise.
Have a nice trip, I mean.
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Even startup founders want to know how willing they are to deceive investors, but that’s a thing of the past. Now that Nikola is in much more reliable hands, it’s time for general manager and general manager Mark Russell to make the most of Nikola’s “ocean of lies” and produce very good vans.
At the time of publication, Tom Yeung did not occupy (or occupy) any position on the values discussed in this article.
Tom Yeung, CFA, is a registered investment whose project is to bring simplicity to the investment world.
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