Nikola Corporation: The “Tesla of Trucking” Just Skyrocketed 99%

Missed the Boat on Tesla Stock? Check This Out

With shares of Tesla Inc (NASDAQ:TSLA) trading at over $1,000 apiece, early investors of the company are certainly laughing all the way to the bank. But not everyone scooped up TSLA stock while it was cheap. For those who did not get on board the Tesla profit train, here’s another company to think about: Nikola Corporation (NASDAQ:NKLA).

If you haven’t heard of Nikola stock before, that’s okay. NKLA stock made its debut on the Nasdaq Global Select Market on June 4, 2020 at around $34.00 per share, so it is still a very new name to stock market participants.

Note that the company did not go public through a traditional initial public offering (IPO). Instead, it went through a reverse merger with VectoIQ Acquisition Corp, a special-purpose acquisition company. (Source: “Nikola and VectoIQ Acquisition Corp. Announce Closing of Business Combination,” Nikola Corporation, June 3, 2020.)

Here’s where things get more interesting. In just a few trading sessions after its debut, Nikola stock shot through the roof. It reached an intraday high of $93.99 on June 9. Even though the stock has pared some of those gains since then, it still trades at $67.73 at the time of this writing. That’s a whopping 99% return in just two weeks!

Nikola Corporation (NASDAQ:NKLA) Stock Chart

Chart courtesy of StockCharts.com

Why did Nikola stock skyrocket? Well, the reason likely has something to do with the booming electric vehicle industry.

You see, Nikola Corporation designs and manufactures battery-electric and hydrogen-electric vehicles, electric vehicle drivetrains, vehicle components, energy storage systems, and hydrogen station infrastructure. (Source: Ibid.)

The company, which was founded in 2015 by Trevor Milton, is based in Phoenix, Arizona and currently has around 250 employees. Unlike Tesla, which started out by making passenger electric cars, Nikola has been focusing on the trucking industry.

Nikola Corporation has three core businesses: “BEV Truck,” “FCEV Truck,” and “H₂ Stations.” BEV stands for battery electric vehicle and FCEV stands for fuel cell electric vehicle. (Source: “Deutsche Bank Global Auto Industry Conference,” Nikola Corporation, June 10, 2020.)

The BEV truck will have a range of up to 300 miles, while the FCEV truck will have a range of 500 to 750 miles and will also be offered with a “bundle pricing model” that includes the truck, fuel, and maintenance.

The company’s H₂ stations will be built one at a time along dedicated routes, based on customer need and network optimization. The hydrogen will be produced economically via electrolysis.

Management plans to launch the BEV truck in 2021 and the FCEV truck in 2023. H₂ station operations are also expected to begin in 2023. While Nikola Corporation has not earned any revenue yet, the reservation numbers look pretty impressive.

By 2016, the company had surpassed $5.0 billion in pre-orders for its FCEV truck. Fast forward to today and Nikola’s FCEV truck reservations stood at over 14,000 units, representing a potential sales value of approximately $10.0 billion. The company said that its newly introduced BEV truck has also received “robust” demand.

Analyst Take

What we are looking at here is a startup that could churn out some very impressive numbers. By offering fuel cell trucks in addition to battery-powered ones, Nikola Corporation has a chance of transforming the trucking industry.

Of course, it’s too early to say how things will eventually play out, and competition could be on the way, but this is indeed a huge opportunity.

The “green-to-wheel” commercial vehicle ecosystem’s total addressable market (which includes vehicle and energy supply) is estimated to be over $600.0 billion. If Nikola can crack open just a small fraction of that market, NKLA stock investors could earn monstrous returns.