Shares of Nikola (NASDAQ:NKLA) are roughly flat on the day, with NKLA stock down less than 1%. That’s actually somewhat impressive, as the S&P 500 is down more than 1% and the Dow is plunging into a bear market. That said, Nikola stock has been struggling to gain positive momentum.
The automaker recently had to recall all of its Tre BEV Electric Trucks produced between Nov. 5, 2021 and June 30, 2022. Unfortunately, it’s a negative mark on its early production results. On the plus side, though, the recall only covers 93 units.
The recall was due to a safety concern involving the seat belt anchorage potentially being installed improperly. Nikola’s partner, Iveco — the company that builds the cabs in Italy — is responsible for the issue.
Another factor for NKLA stock today? A shareholder vote on whether the company will acquire Romeo Power (NYSE:RMO). Both companies have until midnight tonight to vote on the deal. If less than a majority of Romeo’s outstanding shares are tendered, the deal will not go through.
The deal comes from Aug. 1, when Nikola offered to buy Romeo in an all-stock deal. At the time of the offer, the deal was valued at roughly $144 million.
Long-Term Prospects for NKLA Stock
The problem with NKLA stock doesn’t have anything to do with a 93-vehicle recall or its all-stock deal for Romeo Power. Instead, poor execution from its earlier days as a public company and a bear market have been the main culprit to its poor performance.
Shares are down more than 95% from the all-time high in June 2020. The stock is down 61% this year and 57% from the August high.
That high came after the stock initially spiked higher on earnings, although it’s down in four of the last six weeks (and flat during one of those weeks within that stretch). Lastly, NKLA stock is on the cusp of new all-time lows, just pennies above the current low at $3.82. That mark was hit on Friday.
Analysts are pretty positive on the company’s prospects, though. Estimates call for $110 million in revenue this year and more than $630 million in sales next year. That said, consensus estimates do not call for profit before FY 2026.
So while Nikola stock may appear oversold, it may not be a stock investors flock to until the bear market has at least subsided to some degree.
On the date of publication, Bret Kenwell 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.