Nikola Corp. (NASDAQ: NKLA), the wreck of an alternative energy truck company, tore apart investor expectations again. The cause was simple. Management forecast the financial results would be less than expected, and expectations already have been disappointing.
Nikola never had much of a business model. It produces battery-powered and hydrogen-powered trucks. It delivered 63 of its 75 Nikola Tre BEVs trucks to dealers in the third quarter. And Nikola managed to lose $236 million. It is eating through cash at an alarming rate.
“During the third quarter we continued to produce and deliver Nikola Tre BEVs to dealers and customers,” Nikola President Michael Lohscheller commented. Sixty-three vehicles is not much of a delivery record.
Nikola originally said it would build 300 to 500 trucks by the end of this year. It chopped that forecast to a range of 255 to 305. It is a sign management does not understand its own business and cannot be relied upon to offer realistic assessments of its operations. Management also declined to offer a production forecast for next year. That means Nikola executives have little idea what its financial performance will be.
The wreck of poor figures for the third quarter and no comments about its future drove the stock to $3, which is well into penny stock territory. Shares are down 72% this year.
Investors should have realized several quarters ago that a truck company that could not deliver trucks eventually would be stamped out by the world’s largest car companies and Tesla, which are working on competing products. Each of these manufacturers has a strong balance sheet, a large design team and a substantial distribution network. Nikola was never in a position to compete with them.
No one has to guess the future of Nikola’s stock. It will drop further.
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