Nikola Stock Defies the Shorts and Maintains Its Massive Valuation

Nikola (NASDAQ:NKLA) stock is defying the short-selling throng and is keeping its massive $25 billion-plus market capitalization value. Over a week ago it went public, and the stock shot up by almost double.

I wrote about this stock about a week ago in this article, “Nikola’s New Public Listing May Not Overvalue NKLA Stock.” Its market value may not be too high, in my analysis. I did a sort of sum-of-the-parts analysis. But I used a lot of assumptions about Nikola’s prospects.

I have a special interest in Nikola since it’s based here in Phoenix, Arizona, where I live. Some reasons it has moved from Utah are the state’s large number of university students, an easy regulatory environment and its plans to build a massive new plant just south of the city. Now that Nikola has over $700 million in the bank, I will be able to monitor its building progress.

Nikola Stock Will Likely Defy The Shorts

I have read through many online analyses on the stock and on YouTube pointing out the company’s flaws. I find this somewhat ironic since this is similar to what happened to Tesla (NASDAQ:TSLA) when it first went public.

But here is one online YouTube amateur analyst on Nikola stock that you might find interesting. His name is Chicken Genius Singapore. He provides a very good analysis of the pros and cons of the company versus Tesla.

There is also a technology and semi-truck statistics comparison in his video. He points out that Tesla’s semi-trucks are basically more economical and have better performance results than Nikola’s semis.

But, in many cases, I find that these analysts are comparing the company against Tesla, rather than what it is really trying to do. They are a hydrogen fuel company competing against the massive diesel industry. In the end, Tesla may or may not win out in this field, but there will still be room for Nikola’s products.

And that is what is keeping Nikola stock going. The prospect of a wholesale change to the massive diesel truck industry.

Everyone Is Critical, But the Badger May Change Things

Moreover, Nikola is now going to be dangerous to the shorts. It has a lot of money in the bank. For example, if its Badger pick-up truck takes off, the shorts better watch out.

The industry is watching to see how the June 29 reservation opening to buy this pick-up truck will perform. If it’s a runaway success, in terms of demand, Nikola stock could be seen as a long-term winner.

Moreover, Barron’s noted that the stock “keeps on trucking.” This was despite a Bloomberg report critical of the company’s executive chairman, Trevor Martin.

Wall Street pundits are mostly skeptical or non-commited. When CNBC reported that a Wall Street analyst from Cowen published a positive report, it was treated as a sort of novelty recommendation.

What To Do With Nikola Stock

Nikola has a very interesting valuation for a start-up. There is no question about that. It has a lot to live up to. This is clearly unprecedented in the stodgy trucking manufacturing industry.

However, I suspect that investors might have a chance to buy the stock cheaper than it is today. As one online analyst put it, their business plan seems to change a lot.

On the other hand, investors know very well that Tesla received a lot of criticism and faced skepticism when it first started. You can see now how well that turned out.

If I had an early position in the stock, I would likely keep on holding that position. But I am waiting to see if I can get in a bit cheaper than today’s price. This is despite my analysis which showed it might not necessarily be overvalued today.

As of this writing, Mark Hake, CFA does not hold a position in any of the aforementioned securities. Mark Hake runs the Total Yield Value Guide which you can review here.