Nikola stock price forecast after hitting an important resistance

The Nikola (NASDAQ: NKLA) stock price jumped by as much as 5% on Thursday as investors cheered the latest investor presentation. The shares rose to an intraday high of $10.80, which was the highest level since January 14th. It has risen by over 50% from its year-to-date low although it remains 90% below its all-time high.

Nikola investor day enthusiasm

Nikola is an upcoming automotive company that is building heavy-duty hydrogen trucks. The company’s first truck will have a range of 350 miles and will be mostly recommended for short-haul activities. Its other trucks are scheduled to move to production in 2023 and 2024.

Nikola was once a company valued at billions of dollars until a short seller criticized the company and its founder. Since then, the shares have crashed by over 90% and its market cap has dropped to about $3.9 billion.

The Nikola stock price rose on Thursday after the company held an investor presentation day on Wednesday. In it, the management reiterated that it plans to deliver between 300 to 500 Tre BEV trucks this year. It noted that the situation could change because of the challenges with battery scarcity.

Still, Nikola faces substantial headwinds ahead. While there is demand for the products, there is a likelihood that the firm will raise capital this year in a bid to ramp production. Besides, the company’s cash has been falling at a time when it is expected to spend more money on investments. 

Further, it is still too early to determine whether the hydrogen truck market will become as large as the company and its investors expect. Another challenge is the ongoing inflation, which has made most costs to rise. Indeed, we have seen many automakers like Tesla and Rivian hike prices. 

Analysts are also pessimistic about the company. Recently, those at Royal Bank of Canada, Cowen, JP Morgan, and Deutsche Bank have lowered their expectations. Therefore, the overall view is that Nikola is a high risky company although its share price is relatively cheap.

Nikola stock price forecast

Nikola shares have been in a deep dive in the past few months. A closer look shows that it has formed what looks like a descending channel that is shown in yellow. The rally on Thursday pushed the price to the upper side of this channel. 

Therefore, from a technical perspective, the outlook of the Nikola stock price is neutral. A bullish breakout above the upper side of the channel will mean that bulls have prevailed. This will signal that it will keep rising. The alternative scenario is where the shares resume the downward trend.