Nikola (NKLA) shares are up 30% in the last two weeks, largely on market hopes a partnership deal with General Motors (GM) materializes, Deutsche Bank analyst Emmanuel Rosner tells investors in a research note. The analyst reminds investors of two catalysts for Nikola coming up this week, which could create “large stock volatility.” First, on December 1, about 130M additional shares become unlocked, more than doubling the current free float, says Rosner.
A large portion of the shares are owned by departed founder Trevor Milton, which could create “meaningful technical pressure” on the stock if he were to sell, cautions the analyst. Rosner sees December 3 as the second catalyst, which is the deadline for GM and Nikola to close their original strategic partnership. Reaching the deadline without an agreement could enable GM to walk away from the deal easily if it so chooses, which would be “very negative” for Nikola shares, says the analyst. On the other hand, the companies could continue to negotiate past the deadline if common interest levels are high, and reaching a deal would likely be a positive catalyst for Nikola, adds Rosner, who keeps a Hold rating on the stock.