Why Nikola's Value May Fall to Zero - InvestingChannel

Why Nikola’s Value May Fall to Zero

When Nikola (NKLA) went public in March, the stock moved nowhere for months. It was not until May through to late June that a frenzy for electric vehicles lifted Nikola stock to a high of $93.99. But without a product developed, let alone on market, the latest stock sale re-affirms that company’s worth: zero.

Nikola fell by as much as 18% after-hours on July 17 after filing to sell shares. It will sell up to 23.9 million shares. Plus, the time-to-time sales from shareholders of up to 53.39 million common stock and 890,000 warrants is a huge red flag.

The company has no truck on the market. With executives selling stock ahead of the business delivering anything tangible, investors who bought NKLA stock recently may want to book a loss. The stock will likely continue falling.

Speculators might lift the stock temporarily but the rally will not last. Investors are better off looking for a better entry point in Nio Inc. (NIO) or Tesla (TSLA) even at the $1,500 share price. NIO and TSLA trade at unfavorable valuations but if they dip, they may give investors a better entry price for those who want exposure to the EV space.

Insiders and big investors are cashing out before shares lose more value.