Nikola stock price beat Tesla in Q1: will the trend continue?

By:
on Apr 1, 2024
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  • Tesla share price has crashed by almost 30% in 2024.
  • It has underperformed Nikola, the fuel cell truck company.
  • Nikola is seeing some positive tailwinds.

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Nikola (NASDAQ: NKLA) stock price is doing well this year. It has risen nine straight days and is now sitting at its highest level since November 6th last year. Notably, it has jumped by over 18% this year, beating Tesla, which has shed about 30% of its value. 

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Tesla vs Nikola

Tesla vs Nikola stock chart

Nikola is making some progress

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Tesla and Nikola are both facing major challenges. Tesla, in particular, is going through major headwinds as demand for electric vehicles slips. Also, the company is struggling as used car prices tumble. 

Recent data showed that used Tesla prices have crashed by over 50% in 19 months. This is partly because Hertz is flooding the market with thousands of used vehicles. The implication is that many people are either avoiding buying Teslas or going to the used market instead.

Tesla is also seeing robust competition in key markets. For example, Hyundai has become one of the biggest sellers of electric vehicles in the US. Meanwhile, in China, the number of Tesla competitors has jumped. Last week, Xiaomi started selling its EVs in the country.

Nikola, on the other hand, is benefiting from the rising demand of trucks. As I have written before, most trucking stocks like Iveco, Daimler Trucks, and PACCAR have jumped to a record high. 

The company is also benefiting from regulations, which are supportive of EV and hydrogen trucks. Last week, the Environment Protection Agency (EPA) announced new strict rules that it aims will boost the transition to EVs and hydrogen trucks.

California has also announced plans to ban the sale of diesel heavy trucks by 2036. This is notable since California is the biggest economy in the US and one of the crucial buyers of trucks.

Nikola is set to benefit from this transition. For one, it has reduced its ambitions from being a global truckmaker to one that focuses on California. In May last year, Iveco took control of its European EV. And recently, the company said that it would make most of its investments in California.

Meanwhile, the company raised money through a combination of equity and convertible debt. It raised $230 million in Q4 and has the highest unrestricted cash balance. The company had $464.7 million in cash.

Still, the biggest concern for Nikola is that it is still burning cash. Its net loss stood at $153 million in the last quarter, an improvement from the $425 million it lost in Q3. This cash burn will likely continue in the foreseeable future.

The other challenge is that hydrogen trucks are still more expensive than diesel-powered ones. These trucks go for over $600k, which is much higher than diesel trucks even with their subsidies. This could make more buyers hesitant to buy these trucks.

Nikola stock price forecast

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Nikola stock

NKLA chart by TradingView

The daily chart shows that the NKLA share price has staged a strong recovery in the past few days. It has risen for nine straight days, the longest winning streak since 2021. The stock has soared above the 50-day moving average and is nearing the 23.6% Fibonacci Retracement level. 

It has also formed a double-bottom pattern at $0.5832. Most recently, it has jumped above the neckline of this pattern. Therefore, the outlook for the Nikola share price is bullish, with the initial target being the 23.6% retracement point at $1.27. A break above that level will see it rising to the 38.2% point at $1.74.

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