Right now there’s a huge bull/bear debate going on about what the future looks like for Nikola Stock (NASDAQ:NKLA). Will Nikola become the next Tesla (NASDAQ:TSLA) and make investors rich or will the stock go the way of Plug Power (NASDAQ:PLUG)? As we take a closer look, we aim to find out the real story for our subscribers.
First up, there is a lot of talk and FOMO surrounding Nikola stock. Nikola stock more than doubled on Monday. It’s up another 22% in after-hours trading. We know many investors missed this move and are trying to decide what to do next. As we preach over and over again, the key to successful investing is finding the momentum BEFORE it happens and not after. We don’t want to be chasing and end up buying a top.
As you can see from the chart above, if you bought Plug Power stock at the highs, you’re a nursing losses, frustration, and loss of capital and time. After all, we are looking for the next Tesla stock and not the next Plug Power stock.
About Nikola Stock
Before we get into our analysis, here’s a little background info for those that aren’t familiar with Nikola Corporation. Nikola Corporation manufactures electric vehicles. The company offers battery-electric (BEV) and hydrogen fuel-cell electric vehicles (FCEV). It manufactures semi-trucks and powersports vehicles. Nikola Corporation was founded in 2015 and is based in Phoenix, Arizona.
On June 4th, electric heavy-truck maker Nikola began trading on the Nasdaq after its merger with VectoIQ (VTIQ) was approved by shareholders. The provided Nikola with more than $700M in new cash, much of it from a transaction involving Fidelity Investments and P. Schoenfeld.
Founded in 2014, the company has developed a series of all-electric Class 8 trucks that can be powered by batteries or hydrogen fuel cells. It has over 14,000 preorder reservations for the trucks, representing more than $10B in potential sales.
Founder Just Like Elon Musk
One thing needed for Nikola stock to become the next Tesla is a founder like Elon Musk. Nikola has that in Trevor Milton. Milton promotes Nikola stock just like Elon Musk and he isn’t shy on the potential for his company to change a trucking industry still reliant on fossil fuels. Early big-name investors like Jeff Ubben at ValueAct have suggested Nikola may be worth at least $100 billion.
Nikola plans to have its first electric-powered semi-truck out on the market in 2021 (before Tesla’s Semi) with hydrogen-powered options following in 2023. Its first round of charging stations will debut in California in 2021. Milton said:
“We stopped taking orders for a period of time. Ultimately what happened fleets were told the trucks were going to be five years out. That’s too far to plan. Once we hit about $10 billion in orders, we were making people mad. If we were to open all those orders’ books up right now with all the people that have said hey, we want these trucks, you would see a much, much, much higher number than that.”
Hydrogen vs Electric
One of the biggest debates concerns whether electric or hydrogen power makes the most sense. Hydrogen-powered vehicles have never caught on in the passenger car space because of very little investment in the necessary infrastructure.
Nikola’s pitch has always been that hydrogen power makes a ton more sense in a commercial application. Since many commercial trucking routes run point to point, it’s easier to identify where hydrogen stations should be built. Nikola has argued that hydrogen trucks are even better suited for the task of long-haul trucking than battery-powered vehicles for a few reasons. It takes far less time to fill a tank than it does to charge a massive battery.
Battery-powered big rigs also face a conundrum. They need big battery packs to generate sufficient range, especially with a trailer attached. But the bigger the pack, the more the truck weighs, ultimately limiting how efficient it can be.
Nikola vs Tesla
Nikola and Tesla are both battling for Anheuser-Busch as a customer. Here, Nikola is winning. The maker of Budweiser has an order for up to 800 Nikola trucks compared to just 40 trucks from Tesla. Ties Soeters, Anheuser-Busch’s vice president of logistics procurement, has come out praising Nikola and why he chose Nikola over Tesla.
Anheuser-Busch announced a new sustainability effort and said that it wants to power its entire “dedicated fleet” (aka the trucks it directly operates in its supply chain) with renewable energy by 2025. That dedicated fleet maxes out at about 900 trucks, the company says, which accounts for about a third of its distribution network. Nikola’s trucks will be “critical” for meeting that goal, according to Ties Soeters, Anheuser-Busch’s vice president of logistics procurement.
Nikola Stock Bears Out In Force
The one thing that Nikola stock and Tesla stock have in common are very vocal short sellers. Just read Seeking Alpha and the opinion pieces are all bearish on Nikola stock. Before Monday’s squeeze, over 20% of the float in Nikola stock was borrowed. It is now 14% as many of those shorts were forced to cover.
Likewise, Tesla stock has its legions on bears on Twitter with the trending symbol $TSLAQ. The Tesla bears have been determined to destroy Tesla and Elon Musk and the same is now happening with Nikola and Trevor Milton. Luckily, Trevor Milton has picked up a few things from Elon Musk and is coming after the bears. He will no be silenced on Twitter.
Markets go up and markets go down. Nikola stock is on an upward trajectory as the shorts get squeezed and Robin Hood traders pile in on FOMO. We can’s say what the next move will be in Nikola stock – higher or lower. However, what we can say is that over the next one to two years, we believe Nikola stock will continue making new highs. The story is there. The market demand exists. The market potential is enormous. The founder is charismatic and willing to take risks, just like Elon Musk, Jeff Bezos, Bill Gates, and Steve Jobs. Many shorts have been left crushed betting against these men and we believe Nikola stock will end up like Tesla stock and not Plug Power stock.
Good luck to all (except the shorts)!
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Disclosure: We have NO position in NASDAQ:NKLA, NASDAQ:TSLA, or NASDAQ:PLUG and have NOT been compensated for this article.