Nikola stock price trades near 7-month lows on amended deal with GM

Written by: Michael Harris
December 3, 2020
  • Following GM’s revision of its deal with Nikola, shares of the zero-emission carmaker sold off Monday
  • Royal Bank of Canada slashed its price target on Nikola’s stock by $2 to $17 on GM news
  • Shares are now trading around 34% in the red and near May lows

Shares of Nikola Corp (NASDAQ: NKLA) slipped 15% on Tuesday, extending its downtrend as some individuals inside the company were reportedly selling shares of the company a day after General Motors Co amended its deal with Nikola.

Fundamental analysis: Deal amended

Over $1.2 billion worth of Nikola Corp’s stock had been traded on American exchanges by Tuesday evening, as opposed to a daily average of around $1.9 billion over the previous five sessions, data by Refinitiv showed.

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Following GM’s revision of its deal with Nikola, shares of the zero-emission carmaker sold off Monday. The initial deal between GM and Nikola involved an equity stake in the company and plans for making Nikola’s Badger electric pickup truck. GM amended that deal by replacing it with a non-binding agreement where General Motors will provide its fuel-cell system to Nikola.

Royal Bank of Canada slashed its price target on Nikola’s stock by $2 to $17 on the news. 

Former chairman of Nikola Corp Trevor Milton holds the majority stake in the truckmaker’s locked up shares and is obliged to file notice within 2 working days after a sale of his shares, according to U.S. Securities and Exchange rules.

The short-seller report broke out several days after General Motors said it would help ramp up the production of Nikola’s Badger electric pickup truck and take an 11% stake and $700 million, placing the deal under investigation.

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Technical analysis: Shares feeling depressed

Nikola share price fell for a fourth consecutive session and the share lockup period ended on Monday, 180 days after the company’s merger deal with VectoIQ Acquisition and its public debut on the Nasdaq.  

Nikola stock weekly chart (TradingView)

Shares are now trading around 34% in the red and near May lows. A weekly close below  $17.66 (the blue line) will open the door for more losses in the stock. 

Summary 

Nikola Corp’s stock declined 15% for a fourth trading session in a row on the news that insiders were offloading shares of the carmaker a day after GM revised its deal with Nikola.