Today, the battle between short-selling institutional money and the small retail investor is on. In fact, this battle is downright heated. And Nikola (NASDAQ:NKLA) — and NKLA stock — is yet another battleground for investors today.
Currently, NKLA stock is up more than 12% on heavy volume. The company has been on the radar of those looking for a short squeeze opportunity for some time. Indeed, Nikola’s short volume ratio of 20% suggests a squeeze is possible. And that’s all the market needs these days.
Nikola has had more direct run-ins with short-sellers than many of its peers. In fact, Hindenburg Research is a company that has specifically called out NKLA stock in the past. Accordingly, it’s no surprise that for those looking to squeeze some shorts, Nikola looks like a great target.
Let’s dive a bit more into the background on this battleground stock.
Squeeze or Short? Why NKLA Stock Has Seen So Much Volatility
As a company that went public via a reverse SPAC merger, Nikola has been highly volatile to begin with. Most investors with experience in SPACs know just how beaten up they’ve been of late. The premia investors were willing to pay through early 2021 dissipated. Accordingly, those holding SPACs or post-SPAC stocks have seen headwinds on this basis alone.
Unfortunately for investors in NKLA stock, this headwind has been compounded with the global chip shortage that has ravaged the EV segment. Growth expectations have slowed. And rivals such as Ford (NYSE:F) are picking up their game with new product launches. More competition and potential production disruptions don’t bode well for Nikola.
Then there’s the whole Hindenburg debacle. Hindenburg actually published its short report on Nikola in September 2020. The short report alleged a number of improprieties at Nikola, calling out the company’s management team on what Hindenburg alleged was fraud. Regulators followed up this short report with an investigation into Nikola.
Indeed, investors may not be surprised to know that since Hindenburg’s short report was issued, NKLA stock has lost about half its value.
However, those looking to squeeze short-sellers for everything they’re worth see this as an opportunity. Chatter on social media platforms such as r/WallStreetBets has skyrocketed of late. It appears retail investors have gotten their mojo back, and are fighting the battle head-on once again.
Who ultimately prevails in this battle of the will remains to be seen. However, one thing is certain. Investors can expect a lot of volatility on the horizon for NKLA stock.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
