Sometimes a company just needs a little bit of gas in the tank to get going, and it looks like Nikola (NASDAQ:NKLA) got fueled up Friday morning. After one TV analyst outlined the hydrogen megatrend, NKLA stock is soaring higher. So what exactly do you need to know?
Start with a little refresher. Unlike other electric vehicle plays, Nikola primarily focuses on the hydrogen space. It wants to reinvent the freight industry, powering big rigs with a cleaner alternative. This fact is exactly why NKLA stock looks so hot today.
Why? Well, TV analyst Jim Cramer had a pretty clear message for investors this morning. Although Tesla (NASDAQ:TSLA) and its CEO Elon Musk have had an amazing year, Cramer warned that focusing on battery electric vehicles (BEVs) is a mistake. Instead, he recommended hydrogen stocks as better investments.
Cramer is not alone in this opinion. Some experts argue that while BEVs are incredibly important in accelerating a shift to electric vehicles, the contributions of hydrogen fuel cell vehicles (FCEVs) will be larger. This is because it is currently unclear if battery-powered vehicles are capable of replacing traditional trucks. At least for now, it seems that fuel cell electric vehicles are necessary to improve driving ranges and freight capacity.
If a company could truly transform the trucking industry, which has a larger environmental footprint, it could do more to contribute to clean energy initiatives.
That is what Nikola has been arguing. While its trucks remain in development, it has plans to build out a national infrastructure of hydrogen charging stations and release a handful of truck models. It also has a deal with General Motors (NYSE:GM) to produce the Badger, a consumer pickup. Importantly, the Badger will come in both BEV and FCEV versions.
NKLA Stock and the Hydrogen Catalyst
In many ways, investors likely see the pro-hydrogen remarks from Cramer as a turnaround story for Nikola. After coming public to great celebration, NKLA stock has struggled. Why? Investors can thank a short-selling firm for its fall from grace. Hindenburg Research released a lengthy report alleging that Nikola has been misleading investors and falsifying its EV success.
However, Nikola remains in the market as a potential leader in hydrogen-powered vehicles. It certainly has a long way to come, but with General Motors on its side, not all investors are giving up hope. Also importantly, many see the projected election of former Vice President Joe Biden as a major catalyst. Biden has a lengthy clean-energy plan that would likely boost adoption of BEVs and FCEVs, as well as helping contribute to national charging infrastructure for both types of vehicles.
What should you do here? Keep a close eye on Nikola and the hydrogen catalyst. FuelCell Energy (NASDAQ:FCEL), Plug Power (NASDAQ:PLUG) and Bloom Energy (NYSE:BE), three hydrogen tech plays, are also in the green on Friday.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer for InvestorPlace.com.