Nikola stock price forecast: how high can NKLA go?

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on Jul 9, 2024
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  • Nikola’s stock has rebounded by over 60% from its lowest point this year.
  • The company delivered 112 hydrogen trucks in the first half of the year.
  • It faces substantial dilution risks despite its strong deliveries.

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Nikola (NASDAQ: NKLA) stock price has rebounded sharply this month, making it one of the best-performing companies in Wall Street. It rose to a high of $11.80 on Monday, up by over 61% from its lowest point this year. 

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Nikola deliveries are rising

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Nikola, the fast-growing hydrogen truck company, has staged a strong comeback after the company’s deliveries numbers beat the analysts’ estimates. In a statement, the company said that it wholesaled 112 hydrogen fuel cell trucks in the first half of the year.

The company sold these vehicles to companies like Walmart Canada, 4GEN, and IMC. The latter is the biggest marine drayage company in the United States. 

These numbers mean that there is still strong demand for Nikola’s trucks among corporate customers in the United States and Canada. In a statement, the CEO said:

“We are firmly on the field and are continuing to secure our first-mover advantage in zero-emissions Class 8 trucks in North America, as well as with our HYLA hydrogen refueling solutions.” 

Nikola’s stock price has also rebounded in line with other companies in the industry. Tesla stock has short-squeezed, rising by over 40% from its lowest point this year. Similarly, Rivian stock has soared by over 78% from its lowest level in 2024 while Nio has jumped by 25% in the same period. 

This is a sign that investors believe that these companies have become substantial bargains, which could push them higher. At the same time, investors believe that risky assets will do well when the Federal Reserve starts cutting interest rates later this year.

Nikola faces major challenges

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Despite the ongoing rebound, the Nikola stock price faces substantial challenges ahead. First, there is a likelihood that the ongoing rebound is part of a dead cat bounce, which happens when an asset is dropping bounces back. 

Second, the company could dilute its shareholders in the coming years. In its recent financial results, Nikola ended the quarter with over $349 million in cash and short-term investments, down from $466 million in the previous quarter. It has over $242 million in long-term debt.

Therefore, the company will likely dilute shareholders later this year since it is still burning cash. Over the years, Nikola has boosted its total outstanding shares rose from less than 1 million in 2020 to over 44.7 million today.

The most recent dilution happened recently when the company raised cash through a combination of debt and equity. 

Nikola had a levered free cash outflow of over $89.5 million in the last quarter and had a net loss of over $147 million. 

Third, there is a big concern about the hydrogen trucking industry because of the cost of trucks. These trucks cost substantially more than diesel ones. They also cost more to maintain, especially with the poor infrastructure in the US and Canada.

Nikola stock price forecast

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nikola stock

NKLA chart by TradingView

In my last article on Nikola, I wrote that the stock had gotten highly oversold and formed a falling wedge pattern. I then predicted that it would bounce back because of a short squeeze, which has happened.

The stock is now nearing the upper side of the falling wedge pattern. It has remained below the 50-day Exponential Moving Average (EMA), meaning that bears are in control.

It remains below the crucial resistance point at $17.62, its lowest swing in January and March 2024. 

Therefore, there is a likelihood that the NKLA share price will continue rising as buyers target the upper side of the wedge pattern. A move above that point will open the possibility of it moving to the key resistance point at $17.62. The other risk is that the stock could resume the downtrend and retest the year-to-date low of $7.43.

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