Industry Overview - Electric vehicle (EV) stocks have underperformed recently, with consumer interest waning due to concerns about range and charging [1][2] - Despite recent challenges, the future of EVs remains bright, with Bloomberg forecasting a 21% average annual growth in EV sales over the next four years, reaching 30 million cars annually by 2040 [2] Company Analysis QuantumScape - QuantumScape is focused on developing advanced lithium-based batteries, specifically a ceramic solid-state lithium battery that maintains 95% efficiency for longer periods and offers greater driving range [5][6] - The company has not yet reported revenue but began delivering prototype batteries in March, indicating that revenue generation is on the horizon [6][7] - Volkswagen's PowerCo has entered an agreement to manufacture EV batteries using QuantumScape's technology, suggesting strong market interest [7] Plug Power - Plug Power is innovating with hydrogen fuel cells, which can generate electricity for vehicles, and has proven this technology in non-passenger vehicles like trucks and buses [8][11] - The company has faced inconsistent revenue and profitability challenges but is projected to reverse its fiscal downturn, with analysts expecting a strong recovery [12][13] - Plug Power's current price target is nearly double its present stock price, indicating potential for growth [13] Nikola - Nikola focuses on hydrogen fuel cells for class-8 trucks, with a significant increase in deliveries (80% growth from Q1 to Q2) indicating rising demand [15][17] - The company is transitioning from battery-powered trucks to fuel cell-powered vehicles, which are seen as more cost-effective for heavy-duty applications [15][16] - Nikola's revenue is projected to grow over 200% this year and next, driven by fleet owners' demand for zero-emission vehicles [17][18]

Core Viewpoint - Nikola has faced significant challenges over the past three years, resulting in a nearly 99% decline in stock value, with current trading at 2 times this year's sales [1] Group 1: Company Performance - Nikola went public via a SPAC merger and set ambitious production goals, including shipping 600 BEVs in 2021, 1,200 in 2022, and 3,500 in 2023, along with 2,000 FCEVs in 2023 [2] - The actual performance was far below expectations, with no BEVs shipped in 2021, only 131 in 2022, and 79 in 2023, alongside 35 FCEVs delivered in 2023 [3][4] - Revenue figures show $0 in 2021, $50.8 million in 2022, and $35.8 million in 2023, while net losses increased from $690.4 million in 2021 to $966.3 million in 2023 [4] Group 2: Leadership and Financial Strategy - Nikola has had three different CEOs since its public debut, and its founder was convicted of fraud in 2022, contributing to instability [4] - The company increased its outstanding shares by 278% over three years to raise cash through stock sales [5] Group 3: Competitive Landscape - Competitors like Daimler Truck and Tesla have ramped up their electric semi-truck deliveries, posing a significant threat to Nikola's market position [6] Group 4: Future Outlook - Nikola aims to differentiate by increasing FCEV sales and is working with Voltera to build 60 hydrogen charging stations by 2026, although this will increase near-term losses [7] - In the first half of 2024, deliveries rose 49% year over year to 113 trucks, with revenue growing 49% to $38.8 million, and analysts expect revenue to nearly quadruple to $133.5 million for the full year [8] - Analysts project revenue could triple to $406.5 million in 2025 and more than double to $934.2 million in 2026, with an expected adjusted EBITDA margin improvement to negative 17% by 2026 [10] - Despite having $256.3 million in cash, Nikola faces $586.4 million in total liabilities and is expected to incur a net loss of $493 million for the full year, indicating potential cash flow challenges [11]

Core Viewpoint - Investing in Nikola is a bet on the company's ability to maintain cash flow while pursuing its ambitious hydrogen infrastructure plans for fuel cell electric heavy-duty trucks [1][9] Group 1: Company Progress and Challenges - Nikola has made progress in establishing a hydrogen production and fueling infrastructure, focusing on short-haul trucking needs near North American ports [1] - The company sold 72 hydrogen fuel cell electric trucks in the second quarter, generating over $31 million in revenue, aided by regulatory credits [4] - Despite record revenue in the second quarter, Nikola's stock experienced a significant decline of 26.2% in August, raising concerns among investors about the risk-reward balance [2][3] Group 2: Financial Performance - Nikola's net loss from operations improved year-over-year, ending the second quarter with $256 million in unrestricted cash, although this was $90 million less than the beginning of the quarter [7] - The company announced a capital raise of $80 million through convertible notes, with potential for an additional $500 million from future security sales, indicating ongoing liquidity needs [8][9] Group 3: Infrastructure Development - Nikola is investing in renewable energy infrastructure, including hydrogen fuel stations and mobile fueling trucks, with recent openings in Toronto and Southern California [5][6] - The CEO emphasized the company's commitment to operational reality and infrastructure development, but acknowledged the financial costs associated with these initiatives [6]

Core Viewpoint - Nikola continues to experience significant stock declines, with shares down over 99% from all-time highs, primarily due to ongoing insider selling and a lack of profitability [1][5]. Insider Selling and Business Performance - Key executives, including the COO, CFO, and president, are selling their stakes in Nikola, which is a concerning indicator of management's confidence in the business [3]. - The company reported only $31 million in revenue last quarter, alongside a net loss of $134 million, indicating a substantial distance from profitability [4]. - Over the past 12 months, Nikola has burned $500 million in free cash flow against less than $50 million in sales, highlighting severe cash flow issues [4]. Shares Outstanding - Nikola's shares outstanding have increased by 300% over the last few years, a significant red flag that suggests the company is selling more stock to finance operations due to cash burn [6][7]. - The continuous increase in shares outstanding indicates that Nikola is struggling to maintain operations without resorting to equity financing, which is typical of unprofitable companies [6].

Core Insights - The electric vehicle (EV) industry, while not meeting early expectations, is still on a growth trajectory with projected sales increasing significantly in the coming years [2][3]. Industry Overview - The International Energy Administration reports that less than 20% of vehicles sold in 2023 are electric, indicating a slower adoption rate than anticipated [2]. - Consumer interest in EVs is declining due to concerns over range and cost, impacting stock performance in the sector [2]. - Bloomberg Intelligence forecasts global EV sales to rise from approximately 14 million in 2022 to 30 million by 2027, and further to 73 million by 2040, suggesting a robust long-term growth outlook [3]. Company Analysis Nikola - Nikola focuses on battery-powered and hydrogen-powered class-8 trucks, which are efficient and meet rising emission standards [6]. - The company sold 72 hydrogen fuel cell trucks last quarter, totaling 147 units sold since launch, with significant market potential in the U.S. and globally [6][7]. - Despite not being profitable, Nikola expects revenue growth exceeding 200% in the coming years, with analysts projecting a price target of $16.80, over 150% above its current price [8]. Rivian Automotive - Rivian, which entered the market with electric trucks and SUVs, is positioned to capitalize on the growing demand for larger vehicles, which accounted for 80% of U.S. vehicle sales last year [11]. - The company is not yet profitable but is making strides towards profitability while focusing on the long-term growth of the EV market [12]. Toyota - Toyota has historically focused on traditional combustion vehicles but is now increasing its investment in EVs, with a 35% increase in EV sales last year [15]. - The company is also emphasizing hybrid vehicles, which have seen a 24% sales growth, appealing to consumers concerned about battery-only vehicles [17]. - Toyota's established reputation and trusted brand may provide a competitive advantage in the EV market, as consumers may prefer purchasing from a well-known manufacturer [18].

Industry Overview - Interest rates remain high, leading to decreased appetite for financing on Wall Street, particularly affecting electric vehicle (EV) and renewable energy stocks as consumer spending struggles and competition intensifies [1][4] - The overall industry faced a tough week, with earnings reports indicating consumers are trading down, which could impact various sectors including auto sales and electricity demand [3] Company Performance - Shares of Nikola (NKLA) fell by 11.5%, Plug Power (PLUG) decreased by 13.2%, and Li Auto (LI) dropped by 8.3%, indicating a potential continuation of this downward trend [2] - Nikola announced a capital raise of $80 million, with the potential to increase to $160 million in convertible notes, which may lead to significant dilution for the company in the long term [7] - The financial reality for these companies is that mounting losses necessitate new funding, but raising capital becomes increasingly difficult as stock prices decline [8] Market Challenges - Canada plans to implement a 100% tariff on EV imports from China, which could significantly reduce market opportunities for companies like Li Auto amid escalating trade tensions in the auto industry [5] - The recent bankruptcies of companies such as Fisker, SunPower, and Proterra highlight the challenges of financing in the sector without profitability, suggesting a potential continuation of the downward spiral if financial conditions do not improve [10]

Skilled transportation executive positioned to further company focus on zero-emissions trucking and hydrogen infrastructure solutions PHOENIX, Aug. 27, 2024 /PRNewswire/ -- Nikola Corporation (Nasdaq: NKLA), a global leader in zeroemissions transportation and energy supply and infrastructure solutions, via the HYLA brand, today announced the appointment of accomplished transportation executive Thomas "Tom" Schmitt as Chief Commercial Officer (CCO) of Nikola Corporation. As CCO, Schmitt will align Nikola's c ...

Core Viewpoint - Nikola Corporation is raising $500 million through new debt, convertible debt, and shares, which may significantly dilute existing shareholders [1][4]. Group 1: Financial Actions - Nikola plans to start with an $80 million sale of convertible notes and may sell an additional $80 million over the next 18 months with investor consent [3]. - The company has filed for a "universal shelf" that allows it to raise up to $500 million in total [3]. - Nikola's current market capitalization is below $400 million, indicating that the planned fundraising could dilute shareholders by more than 50% if convertible debt is converted into shares [4]. Group 2: Shareholder Impact - The share count of Nikola has increased by over 170% in the last 18 months, indicating a trend of dilution [5]. - The company is burning through cash at a rate exceeding $510 million per year, suggesting that even raising $500 million may not sustain operations for another year [5]. - Investors are likely to face further dilution within the next 12 months, contributing to a negative sentiment towards the stock [6].

David McNew/Getty Images News Investment Thesis Since my last piece in the fall, Nikola's (NASDAQ:NKLA) shares have largely continued on their downward slope. The company has been struggling to shake off years of setbacks and the overhanging cloud of crimes that Nikola's founder and convicted felon, Trevor Milton, committed. Nikola's stock was in a consistent decline, dropping for nine consecutive sessions earlier this month and down approximately 19% at the low earlier this month. Despite the rally followi ...

Core Viewpoint - Nikola Corporation's Q2 results showed a significant increase in revenue but also a substantial increase in gross losses, indicating ongoing financial struggles despite record deliveries of hydrogen-powered vehicles [2][3]. Financial Performance - Revenue for Q2 2024 more than doubled from $15 million to $31 million, while gross loss increased from $28 million to $55 million [2]. - Gross margin percentage improved slightly from -180% in Q2 2023 to -175% in Q2 2024, but the company is still far from achieving sustainable unit economics [2]. - The average sticker price for Nikola's trucks is $351,000, which is less than half of the production cost, leading to continued financial losses [2]. Operating Losses - Nikola reported a $131 million operating loss for Q2 2024, an improvement from the $169 million loss in Q2 2023, but still indicative of significant financial challenges [2]. - The company has made some progress in reducing R&D and SG&A costs, but overall financial health remains precarious [2]. Cash Position and Dilution - As of June 30, Nikola had only $256 million in cash, which may last for two more quarters based on its current burn rate [3]. - The company has indicated it does not have sufficient funds to continue operations for the next 12 months without raising additional capital [3]. - Nikola has already diluted its shares by over 300% since its listing and will likely need to raise funds again, risking further dilution for current shareholders [3]. Future Viability - Nikola's fuel cell trucks are described as a "fun science project" with limited potential for profitable scaling, raising concerns about the long-term viability of the business [3]. - Investors are currently funding the company's R&D efforts, but there is skepticism about whether these investments will yield returns in the future [3].