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Nikola’s news may “generally turn out to be positive” in the next year, according to JP Morgan analyst Paul Coster.
Courtesy Nikola
The Nikola scandal needs to turn the corner.
This year,
Nikola
(ticker: NLA), a manufacturer of trucks powered by hydrogen fuel cells, has partnered with
General Motors
(GM) slashed, got rid of charges of falsifying its technology and endured the abrupt dismissal of Trevor Milton, its founder and chief executive.
Last week, garbage truck
Republic Services
(RSG) canceled an order for 2,500 trucks.
The drama surrounding the “Tesla of Trucking” is expected to end in 2021, when Nikola launches real trucks and other evidence that his technology is viable, according to analyst Paul Coster of JP Morgan.
Nikola’s stock has been on a wild ride since its public debut in June, when it hit its 52-week high at $ 93.99. Since then, Nikola’s shares have fallen to around $ 14. The stock rose sharply on Monday, jumping more than 9% at the start of the session. They managed to earn 42% this year, compared to a 15% gain in the
S&P 500 Index.
Coster wrote in a note on Monday that he expects news about Nikola to “generally turn out to be positive” as he reduced his target price from $ 40 to $ 35 to “reflect the execution risk associated with a tarnished brand. “
The analyst says Nikola “cleaned the house” before the end of the year, dropping 50% in the last month after the cancellation of partnerships with GM and Republic.
Coster said the partnerships were made in a hurry by Nikola’s founder, Milton, and allocated resources for non-strategic initiatives.
Still, it was an incentive for Nikola to get support from GM, which planned to take a stake and help build his electric pickup.
A few days after the partnership with GM was announced this fall, short sales analytics company Hindenburg Research released a report that claimed Nikola was falsifying its technology, pointing to a 2016 video showing a Nikola truck going down a hill (but not under power) Nikola denied the charges. Milton left after that, and the partnership with GM was cut in November.
Still, Nikola has made some progress on other fronts. This month, she made a deal with the Arizona Public Service dealership to guarantee the electricity supply she needs for a planned supply network.
In addition, says Coster, two of his Nikola Tre electric semi-trailers are now in Arizona, and two more are scheduled for delivery in January. Nikola could have nine trucks for testing by the end of the first quarter and commercial availability of the Tre in late 2021.
“We expect Nikola to publish a video of a Tre running in January,” said Coster in his note maintaining an overweight rating in action. “We are looking for a steady stream of updates for the truck in 2021.
“We expect much less drama in 2021.”
Write to Liz Moyer at [email protected]