Nikola Can Be an EV Winner as Production and Delivery Ramp Up InvestorPlace - Stock Market News, Stock Advice & Trading TipsWith several new delivery agreements underway, positive developments in NKLA stock make it a significantly less risky bet than before....
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Shares of up-and-coming electric vehicle (EV) truck producer Nikola (NASDAQ:NKLA) fell dramatically in the past year. The company was under the scanner of authorities for its apparent misrepresentations to investors. However, after distancing itself from its founders and chief executive, NKLA stock is looking prime for a comeback. Truck production and deliveries are expected to rise substantially this year, which indicates that the substantial price dip is largely undeserved.
The EV market has been on fire in recent years, with new startups coming into the market via special purpose acquisition company (SPAC) deals. SPACs have given several companies the chance to raise massive capital for their plans.
Nikola was no different, as it went public through a merger with SPAC VectoIQ Acquisition. NKLA stock shot up to highs of nearly $94 in June 2020 but has seen a consistent decline in value ever since.
After finalizing its proceeding with the Securities and Exchange Commission (SEC), Nikola can now finally advance its programs and rebuild its reputation. It appears to be pulling itself up to deliver an incredible product and tap into some massive opportunities ahead.
Nikola's Production and Delivery Plans
Nikola has turned on the afterburners in the expansion of its revenue base. During the fourth quarter, Nikola began deliveries of its Tre battery-electric vehicles (BEVs) and expected to ramp up production in its Coolidge factory significantly.
Moreover, it started pilot operations with brewing giant Anheuser-Busch (NYSE:BUD) for its Tre fuel-cell electric vehicles (FCEV) within the brewer's distribution network in Southern California.
It recently signed letters of intent (LOI) with three different companies, which could be the beginning of a new long-term partnership. The first of these LOIs was signed in December last year with liquid bull transportation specialist Heniff Transportation to deliver 100 trucks. 10 of Nikola's Tre trucks will be delivered during the first half this year, and the other 90 will follow after successful integration.
Similarly, in January, Nikola signed a couple of LOIs with Saia LTL Freight and Covenant Logistics. Like with the Heniff agreement, Nikola will supply 100 Tre trucks to Saia LTL, with 25 delivered during a testing period. With Covenant, Nikola will be delivering 10 of its Tre Trucks and 40 Tre FCEVs. Deliveries are likely to begin in the second quarter this year.
An Enticing Outlook for NKLA Stock
Nikola's recent announcements have been very positive and suggest some competitive products on its hands. Its fourth-quarter results showed an adjusted EBITDA loss of $90.4 million compared with a consensus of $134 million. Moreover, with a laser focus on revenue generation this year, that figure will narrow down even more.
It has multiple milestones which it has set out to achieve this year. Firstly, it plans to deliver 300 to 500 Tre BEVs to its customers. With a hefty price tag of $270,000, it could potentially generate $81 million at the lower end of the guidance.
Moreover, the company will continue testing out, building and validating its FCEV beta trucks. Additionally, it plans to construct its first hydrogen production hub in Arizona.
A lot of where NKLA stock ends up at the end of 2022 depends upon Nikola's production and delivery progress. If it can deliver on its goals and stick to its timelines, its shares will revalue significantly higher.
The Final Word on NKLA Stock
Nikola offers a unique value proposition in the EV trucking space. It has been fulfilling its promises and is likely to thrive this year.
However, all eyes will be on its upcoming quarters, when investors will have a sense of where it's at. If it can nail its objectives, it will be in for an incredible time ahead.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
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