The gravity-defying rally of electric vehicle startup Nikola Corp. continues to gain momentum as the company takes steps to conserve cash and secure funds. The surge in stock price has been fueled by a resurgence in mom-and-pop investors and a wave of positive news. This article analyzes the reasons behind Nikola’s recent rally and provides an expert viewpoint on the situation.

Key Points to Note:

• Shares of Nikola have gained almost 50% in just three sessions.
• The stock’s rally is driven by a resurgence of mom-and-pop investors.
• Nikola has been a popular name in meme speculation.
• News of JB Hunt Transport Services placing an order for Nikola’s zero-emission trucks has further fueled the frenzy.
• Nikola recently secured grants totaling $58.2 million to reduce cash burn.
• The company is preparing for its annual shareholder meeting and expected to report second-quarter results.

Analysis:

Nikola Corp., once seen as a potential competitor to industry giant Tesla, is currently experiencing a remarkable rally that shows no signs of slowing down. Over the past two months, the stock has soared by an astounding 476%, with a significant portion of the increase driven by mom-and-pop investors participating in meme speculation.

According to Vanda Research, Nikola has been a prominent name in meme speculation, attracting attention on social media platforms like Twitter and Stocktwits.com. The company’s high short interest has made it an attractive target for meme traders looking to capitalize on short squeezes and market volatility.

The recent surge in Nikola’s stock price began in June after it dropped below $1, prompting a warning of delisting risk from Nasdaq. Despite the initial plunge, the stock has been on a near-vertical ascent since then, up 44% year-to-date. However, it is important to note that even with the recent rally, Nikola’s stock price remains approximately 96% below its record highs reached in mid-2020.

The rally in Nikola’s stock has been further fueled by positive news, including JB Hunt Transport Services placing an order for Nikola’s zero-emission Class 8 trucks. This development has generated excitement and helped the stock’s momentum.

In addition, Nikola has recently secured significant grants to reduce its cash burn. The company received a $41.9 million grant to build six hydrogen refueling stations in Southern California and announced an additional $16.3 million grant. These grants are crucial for Nikola as reducing cash burn is essential for long-term sustainability and investor confidence.

The timing of these developments is noteworthy as Nikola is gearing up for its annual shareholder meeting on August 3. Investors will have the opportunity to vote on a proposal to increase the number of shares of the company. This proposal has faced criticism from Nikola’s ousted founder, Trevor Milton. Analysts suggest that the company aims to maintain its positive momentum with news leading up to the meeting and subsequent second-quarter results.

In summary, Nikola Corp.’s stock has experienced an extraordinary rally driven by a resurgence in mom-and-pop investors and a series of positive news events. The company’s focus on conserving cash and securing grants has also played a part in fueling the stock’s surge. However, it is important to approach such speculative investments with caution, as the stock remains significantly below its previous record highs. Investors should carefully evaluate the company’s long-term prospects before making any investment decisions.

Expert Viewpoint:

“Nikola has been an active name for meme speculation. The company’s high short interest attracts meme speculators,” says Michael O’Rourke, chief market strategist at Jonestrading.

Cowen analyst Jeffrey Osborne highlights the importance of reducing cash burn for Nikola’s sustainability. He states, “Anything Nikola can do to reduce the cash burn is helpful.”

It is crucial for Nikola to address its financial position and demonstrate long-term viability to ensure continued investor interest and confidence. The company’s upcoming shareholder meeting and second-quarter results will provide valuable insight into its progress.

Conclusion:

The recent surge in Nikola’s stock price driven by mom-and-pop investors and positive news highlights the interest surrounding electric vehicle startups. While the rally may present investment opportunities, it is essential for investors to exercise caution and conduct thorough research before making any decisions. Nikola’s financial stability, long-term prospects, and market competition should be carefully assessed. It is essential to approach speculative investments like meme stocks and highly volatile sectors with a well-defined financial plan and risk management strategy.

As the meme-stock phenomenon continues to captivate market participants, it is vital for retail investors to evaluate their investment objectives and align them with a diversified portfolio that suits their risk tolerance and long-term goals. Seeking the advice of a financial advisor can provide additional guidance and ensure a well-informed approach to investing in such speculative sectors.

Remember, while the allure of quick gains may be enticing, a prudent investment strategy focuses on long-term value and sustainable growth.