Nikola’s Stock $NKLA is a Warning of the Risks of SPACs in 2020
So you wanted to be a day trader in 2020, eh? Nikola’s stock is a stark warning to all you Millennial and GenZ showboats.
After hitting a summer high of $79.73, Nikola’s stock is down later this summer. One month ago it was $71.10. Today, after a terrible week, it’s $29.91.
Dilution concerns are pretty normal for SPACs of this size that are this fraudulent. The company announced a plan to redeem its publicly traded warrants by issuing millions of new shares and thereby destroyed trust in the brand. This is how SPACs work. They fast-track a quick buck.
Still in the 2020s we don’t even know if hydrogen has a future with the rising EV sector. Maybe in the 2030s it will. Think about it though. The warrants, issued by VectoIQ in 2018, give holders the right to buy one share of Nikola stock from the company at $11.50, well below the stock’s recent price levels.
Can you Really Trust a Badger?
Did you do your due diligence when you bought Nikola shares over $50? Do you understand that IPOs are a depreciating asset in 85% of cases? The more speculative they are, the harder and quicker they fall. $NKLA is speculative in the best of times.
Nikola said on Wednesday that holders of the warrants, which trade under the ticker symbol “NKLAW,” must redeem them by 5 p.m. EDT on Aug. 21, or they will expire with a value of just $0.01. Kind of sketchy if you ask me.
Auto investors will learn more about Nikola’s finances and its plans to get its trucks into production when it reports its second quarter results after the market closes on Aug. 4. I’m not hopeful.
If you don’t have a product and we don’t know how the market will be in even two years time, how can I put faith in your company? It’s really just common sense.
$NKLA might be the worst bust of 2020 for robinhood investors. But Tesla’s outrageous price might be next. Greed is not good for the would-be IPO investor. If you see the 10-year mean trajectory of most IPOs, it’s straight down, like 1000s of percent down. This is a competitive world. Hype is your foe.
Why are Nikola’s Shares Going down?
Nikola was always just a side show to the freak show that is Tesla $TSLA in 2020. This wasn’t a surprise — investors have known about the warrants all along. The massive exodus from the stock is troubling, if you are yet another swindling billionaire who perpetuates the quick SPAC buck ploy.
The history of the stock market is littered with companies that told people they had an incredible business plan and tons of great products. That SPACs are more common in 2020 is a red flag, not a stellar opportunity for Robinhood gamblers.
I would not give my lunch money to a SPAC, not one cent. The EV bubble in 2020 is certainly a lot like the dot-com bubble of the early 2000s. Even the NASDAQ and BigTech is in a bubble, while we’re out here dying in the real world.
Nikola was valued just recently with a market cap a bit over $26 billion, more than Ford or Fiat Chrysler. Its true value is likely well under $1 billion. When a stock loses most of its value very quickly, it’s hard to trust that hydrogen vehicles at scale are even possible as EVs will become significantly cheaper in the decade ahead.