Nikola (NKLA): A Long Ways Down

7 Ara 2020

NKLA (18.59/share at the time of this writing)
NKLA

In my humble non-expert opinion, Nikola has a long way down to go. I'm not hating on Nikola. In fact I think they're truck designs looks cool but...captain obvious may tell you that this is a no-brainer, and from a business standpoint I agree. I see no potential based on what the company has to offer as of today. The original deal with GM was "revised" AKA downgraded. That deal was worth $2 billion. The original deal already had me scratching my head. The revised deal still has me wondering what Nikola has to offer as a business.

The original deal:

• GM provides fuel-cell technology to Nikola
  
• GM manufactures Badger (pickup truck) for Nikola
  
• GM takes 11% stake in Nikola in return for above services
  

The revised deal:

• GM provides fuel-cell technology to Nikola
  
• GM gets paid in cash?
  

Based on what Nikola has to offer, there is no reason for Nikola to have any value. What is their competitive advantage? What value is being created? Are they simply marketers? They need to come up with something. From what we first learned in the Hindenburg Report, they don't actually have any proprietary technology that is solely owned by Nikola. It's all third-party agreements. Seems like Trevor Milton is trying to become the Steve Jobs of EVs but without any of the proprietary Apple technology. He's charismatic and I guess he brings ideas together...? So what's left?

Comments are welcomed. If you're still holding Nikola, why? And if you're not holding anymore, why not?

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You could argue that NIO is in the same boat since they also have a mega manufacturer (JAC Motors) creating vehicles for them. But there are key differences.
1. JAC Motors is state-owned. The Chinese government has every incentive to prop up their own EV companies even if they're friendly with US-based Tesla. They're not going to snub home-grown competition.
2. The Chinese government has committed to making all automobiles sold in China "eco-friendly" by 2035. Again, homegrown EVs have an advantage.
3. Nio has functional vehicles that run on electric batteries (not downhill gravity).
4. Nio has sales.
5. Prior to its 2020 pop, Nio had a dedicated fanbase to which they created Nio Clubhouses for (to cultivate and grow its cult).

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Refs:

*wsj.com/articles/general-motors-takes-stake-in-electric-vehicle-company-nikola-11599568421?mod=article_inline
*wsj.com/articles/gm-nikola-agree-to-scaled-down-supply-agreement-11606742652
*asia.nikkei.com/Business/Automobiles/China-plans-to-phase-out-conventional-gas-burning-cars-by-2035
*hindenburgresearch.com/nikola/
*azcentral.com/story/money/business/tech/2020/11/30/general-motors-drops-funding-nikola-motors-badger-truck-paused-phoenix/6462061002/
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Disclaimer: This is my non-expert opinion and not financial advice.