Nikola (NASDAQ:NKLA) is once again headed higher, but this time, there appears to be no real news behind the rally. Instead, rumors and an upcoming event have investors excited about the electric vehicle stock. So what do you need to know? And what are these potential upside catalysts behind NKLA stock now?
Broadly, there has been a lot of enthusiasm behind all hydrogen fuel cell companies. Last week, we reported that NKLA stock was up because of TV analyst Jim Cramer. Cramer, in a blow to Tesla (NASDAQ:TSLA), said that fuel cell electric vehicles were a better bet than battery electric vehicles because of their potential. Then, in recent days, we have seen names like FuelCell Energy (NASDAQ:FCEL) rally on broader sector sentiment.
However, it appears today that investors are eyeing one specific event as a catalyst for Nikola. So what is that event? Well, tomorrow, General Motors (NYSE:GM) will present at the Barclays 2020 Global Automotive Conference. Because CEO Mary Barra has focused on electric vehicles recently, there is good reason to believe EVs will also be the focus of her presentation.
The company has shared updates about its all-electric Lyriq and plans for the electric GMC Hummer. Additionally, GM announced earlier in November that it was hiring 3,000 more workers to ramp up its electric vehicle business.
But where does Nikola fit in? You may remember that Nikola and General Motors are in talks to form an electric vehicle partnership. The deal should have closed at the end of September, but things went awry after short-seller Hindenburg Research released a stock-sinking report.
NKLA Stock and GM Speculation
So what is this yet-to-close deal all about? The short story is that in addition to its plans for electric freight trucks, Nikola has also promised a consumer pickup. This vehicle, which it calls the Badger, is not yet in production. A potential deal between General Motors and Nikola would give the latter a boost in its Badger plans.
How exactly would the deal work? Well, prior to the short-seller report, General Motors said it planned to receive a $2 billion equity stake in Nikola. After that, it would then help the company produce its Badger pickup truck. This would save Nikola $4 billion in battery and powertrain costs, as well as $1 billion in engineering costs.
Unsurprisingly, this deal was super exciting to investors at the time. It would give Nikola a much-needed boost, and it would also give General Motors more of an edge in the EV race. Now, investors just need to wait to see how things shake out.
For now, there is no real news behind the rally in NKLA stock, and there is no proof that General Motors will provide an update on the deal tomorrow. However, if it does, expect Nikola to once again be a trending equity.
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.