Investors who bought stocks during the COVID-19 market crash in 2020 have generally experienced some big gains in the past two years. But there is no question some big-name stocks performed better than others since the pandemic bottom.
Nikola's Bumpy Road: One company that has been a volatile investment in the last two years: electric vehicle maker Nikola Corp (NASDAQ: NKLA)
Nikola went public via a SPAC merger on June 4, 2020, but the company almost immediately ran into major problems. After rallying from under $15 to above $35 prior to the merger, Nikola shares soared as high as $93.99 in June 2020 within days of the completed merger.
Nikola shares began to cool off in the following weeks, but long-term investors still felt confident about their stakes when General Motors Company (NYSE: NYSE:GM) announced in September 2020 it would be taking an 11% ownership stake in Nikola as part of a new partnership deal.
Within days of the GM news, short seller Hindenburg Research released a bombshell report on Nikola accusing the company and founder Trevor Milton of deceiving investors by using an “ocean of lies” about the viability and functionality of its electric truck prototypes.
Milton left the company shortly thereafter after admitting the company recorded and used videos of trucks rolling downhill to give the appearance the prototypes were working vehicles.
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In 2020, Nikola reported just $95,000 in revenue and a net loss of $370.8 million.
By the time Milton resigned from the company on Sept. 21, shares were trading back down at around $24. By the end of November, GM had completely re-worked its deal with Nikola and said it would no longer include an ownership stake in the company. At the time, Nikola shares were trading at around $20.
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Nikola ultimately hit its low point of 2020 on Dec. 24 when the stock reached $13.51. Unfortunately, things went from bad to worse in 2021.
Nikola In 2022, Beyond: An economic rebound coupled with impressive sales growth from a handful of EV companies created a major tailwind for EV stocks in the second half of 2020 and into 2021. Nikola missed out on the EV stock party.
Milton was indicted by a federal grand jury and charged with three counts of fraud in late July 2021. Nikola continued to generate heavy losses and minimal revenue throughout 2021 and the first half of 2022. In early August, Nikola reported just $18.1 million in revenue and said it delivered just 52 vehicles in the second quarter.
Nikola ultimately hit its all-time low of $4.41 in July 2022 before rebounding to $6.75 today.
Investors who bought Nikola stock the day it hit its 2020 pandemic low and held on have little to show for their patience at this point. In fact, $1,000 in Nikola stock bought on Dec. 24, 2020, would be worth about $490 today.
Looking ahead, analysts are expecting Nikola stock to rebound in the next 12 months. The average price target among the eight analysts covering the stock is $9.50, suggesting 40.7% upside from current levels.
Photo courtesy of Nikola.
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