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]

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].

VanderWolf-Images/iStock Editorial via Getty Images Second Quarter Financial Highlights Note: I have covered Nikola Corporation (NASDAQ:NKLA) previously, so investors should view this as an update to my carlier articles on the company. Last week, zero-emission transportation start-up Nikola Corporation ("Nikola") reported mixed Q2/2024 results: | --- | --- | --- | --- | --- | --- | --- | --- | --- | |------------------------------------------------------------------------------------------------------------ ...

Production and Sales - The company commenced commercial production of Tre BEVs in Q1 2022 and Tre FCEVs in Q3 2023 at its Coolidge, Arizona facility[191] - For the three months ended June 30, 2024, the company produced 0 Tre BEVs and shipped 1, while for the same period in 2023, it produced 33 and shipped 45[196] - The company produced 77 Tre FCEVs and shipped 72 during the three months ended June 30, 2024, marking the beginning of FCEV shipments in Q4 2023[197] Financial Performance - Total revenues rose to $31.3 million in Q2 2024, a 104% increase from $15.4 million in Q2 2023[202] - Truck sales revenue increased by $16.7 million, or 139%, from $12.0 million in Q2 2023 to $28.7 million in Q2 2024, driven by higher sales volume and average selling prices of FCEVs[204] - Net loss from continuing operations was $133.7 million in Q2 2024, a slight improvement of $6.3 million compared to a net loss of $140.0 million in Q2 2023[202] Costs and Expenses - Cost of revenues for truck sales increased by $38.8 million, or 96%, from $40.2 million in Q2 2023 to $79.0 million in Q2 2024, due to higher production costs and warranty expenses[206] - Total operating expenses decreased by $64.6 million, or 46%, from $141.0 million in Q2 2023 to $76.4 million in Q2 2024, primarily due to reduced R&D and administrative costs[202] - Research and development expenses decreased by $24.4 million, or 38%, from $64.5 million in Q2 2023 to $40.2 million in Q2 2024, reflecting lower spending on outside development and personnel costs[209] Cash Flow and Liquidity - The company experienced negative cash flow from operations of $250.2 million for the six months ended June 30, 2024[249] - As of June 30, 2024, the company had cash and cash equivalents of $256.3 million, with current assets totaling $430.1 million[245] - The company plans to utilize short-term liquidity for ongoing activities including BEV recall work and scaling production of FCEV and BEV trucks[250] Strategic Plans and Market Conditions - The hydrogen fuel cell vehicle market is in an early stage, leading to potential production shortages and delivery delays due to supply chain challenges[197] - The company aims to develop hydrogen fueling infrastructure to support its FCEV trucks and has plans for long-term supply contracts for hydrogen[192] - The company expects to finance operations through existing cash, stock sales, debt financing, and strategic partnerships until sufficient revenue is generated[193] Shareholder Impact - The company reported a significant increase in weighted-average shares outstanding, from 23,623,094 to 46,699,945, representing a 98% increase[201] - The company expects to fund cash needs through a combination of equity and debt financing, which may result in dilution to stockholders[253] Other Financial Metrics - Adjusted EBITDA for Q2 2024 was $(109.4) million, an improvement from $(125.1) million in Q2 2023, reflecting a 12.6% reduction in losses[235] - Non-GAAP net loss for Q2 2024 was $(124.5) million, compared to $(139.3) million in Q2 2023, indicating a 10.1% improvement[237] - Other income (expense), net improved by $9.4 million, from a net expense of $5.5 million in Q2 2023 to a net income of $3.9 million in Q2 2024, attributed to gains on financial instruments and foreign currency exchange[215]

Revenue and Sales Performance - Nikola reported Q2 2024 revenue of $31.3M, up 318% from Q1 2024[2] - Nikola wholesaled 72 hydrogen fuel cell electric vehicles (FCEVs) in Q2 2024, an 80% increase from Q1[2] - Total revenues for the three months ended June 30, 2024, were $31.319 million, compared to $15.362 million in the same period in 2023[15] - Nikola produced 77 trucks and shipped 73 trucks in Q2 2024, compared to 33 produced and 45 shipped in Q2 2023[7] Financial Performance and Losses - Nikola's gross loss in Q2 2024 was $54.7M, with a gross margin of -175%[7] - Nikola's net loss from continuing operations in Q2 2024 was $133.7M, compared to $140.0M in Q2 2023[7] - Nikola's Adjusted EBITDA for Q2 2024 was -$109.4M, an improvement from -$125.1M in Q2 2023[7] - Net loss for the three months ended June 30, 2024, was $133.674 million, compared to $217.828 million in the same period in 2023[15] - Net loss from continuing operations for the six months ended June 30, 2024, was $(281,396) thousand, compared to $(285,261) thousand in the same period last year[24] - Adjusted EBITDA for the six months ended June 30, 2024, improved to $(213,427) thousand from $(228,756) thousand in the previous year[24] - Non-GAAP net loss for the six months ended June 30, 2024, was $(241,426) thousand, compared to $(259,100) thousand in the same period last year[25] Operational Efficiency and Environmental Impact - Nikola's FCEV end fleets have traveled over 550K miles with an average fuel economy of 7.2 mi/kg, outperforming the average Class 8 truck by 23% in fuel efficiency[3] - Nikola's FCEV operations have avoided approximately 867 metric tons of CO2 tailpipe emissions[3] Infrastructure Development - Nikola opened a HYLA branded station in Toronto and completed commissioning a modular station in Santa Fe Springs, doubling capacity at the Ontario, CA station[4] Market Share and Vouchers - Nikola holds 99% of FCEV and 23% of BEV HVIP vouchers in California at the end of Q2 2024[5] Cash Flow and Financial Position - Cash and cash equivalents as of June 30, 2024, were $256.330 million, down from $464.715 million as of December 31, 2023[19] - Net cash used in operating activities for the six months ended June 30, 2024, was $250.156 million, compared to $287.165 million in the same period in 2023[20] - Net cash provided by financing activities increased significantly to $324,138 thousand compared to $47,591 thousand in the previous period[22] - Adjusted free cash flow for the six months ended June 30, 2024, was $(280,338) thousand, compared to $(374,884) thousand in the previous year[26] Expenses and Write-Downs - Research and development expenses for the six months ended June 30, 2024, were $79.658 million, compared to $126.320 million in the same period in 2023[15] - Inventory write-downs for the six months ended June 30, 2024, were $37.576 million, compared to $12.718 million in the same period in 2023[20] - Stock-based compensation for the six months ended June 30, 2024, was $16,736 thousand, down from $50,257 thousand in the same period last year[25] - Loss on debt extinguishment for the six months ended June 30, 2024, was $2,313 thousand, compared to $20,362 thousand in the previous year[25] - Regulatory and legal matters expenses for the six months ended June 30, 2024, were $4,297 thousand, up from $3,240 thousand in the same period last year[25] Assets and Liabilities - Total assets as of June 30, 2024, were $1.109914 billion, down from $1.274857 billion as of December 31, 2023[19] - Total liabilities as of June 30, 2024, were $586.361 million, up from $555.683 million as of December 31, 2023[19] Share Information - Weighted-average shares outstanding, basic and diluted, for the six months ended June 30, 2024, were 45.614635 million, up from 20.987679 million in the same period in 2023[15] - Weighted average shares outstanding, basic and diluted, increased to 45,614,635 for the six months ended June 30, 2024, from 20,987,679 in the previous year[25]