Nikola Corporation: Sell The Rally As Further Dilution May Be Looming

Summary:

  • Shares of ailing zero-emission transportation start-up Nikola Corporation have rallied by more than 50% from last week’s all-time low after the company announced higher-than-expected FCEV truck sales.
  • Unfortunately, recent changes in the company’s go-to-market strategy are likely to result in increased cash burn.
  • But even at the current rate of cash usage, Nikola would be required to raise additional capital in the second half of the year.
  • Last month, the company gained shareholder approval for increasing the number of authorized shares by more than 1,500%, thus paving the way for additional shareholder dilution.
  • Consequently, investors should consider using the recent rally for disposing of existing positions ahead of what I expect to be another dismal quarterly report in early August.

Electric truck Nikola on a street

Tramino

Note:

I have covered Nikola Corporation (NASDAQ:NKLA) previously, so investors should view this as an update to my earlier articles on the company.

Shares of ailing zero-emission transportation start-up Nikola Corporation (“Nikola”) have rallied by more than 50% from last week’s


Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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