Transportation Innovation

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>>> Truck-Building Tesla Competitor Nikola Draws the Attention of a Short Seller


Barron's

By Al Root

June 10, 2020


https://www.barrons.com/articles/nikola-stock-tesla-semi-truck-short-seller-ipo-51591794032?siteid=yhoof2&yptr=yahoo


Nikola makes trucks that do things like transport goods on highways across America.

Nikola stock’s sharp rise has caught the interest of a noted short seller. Citron Research’s Andrew Left predicted that shares in the highflying trucking startup will fall 50% over the next month. He questions management, and said more competition from electric-vehicle behemoth Tesla could ding Nikola stock in the short run.

Short sellers such as Left make bearish bets on stocks by borrowing shares and selling them, hoping to buy them back later at a lower price and pocketing the difference.

Nikola’s Founder on the Future of Long-Haul Trucking
It is a bold call. After all, Nikola’s stock (ticker: NKLA) has risen roughly 130% over the past week, giving the company a market value exceeding trucking peer Paccar (PCAR) and even Ford Motor (F).

It has been quite a run since shares made their public debut on June 3. Nikola essentially went public at about $34 a share. Essentially and about are important modifiers here, because Nikola didn’t have a traditional IPO. It was purchased by a special-purpose-acquisition company called VectorIQ. Vector then changed its name to Nikola and its stock symbol to NKLA. The merger was announced in March.

Nikola makes trucks. The heavy-duty variety that do things like haul cement and transport goods on highways across America. Its smaller heavy-duty trucks are battery-powered. Those are due to be sold beginning around 2021. The larger semi-trucks are powered by hydrogen fuel cells and are due to be sold around 2023.

Left, for his part, is unimpressed by the early stock success, saying the company has been overly promotional. That is a charge short sellers levy from time to time when they think management is talking up its company’s stock.

The charge is difficult to support or quantify. Management teams, especially around public offerings, often talk about the best points of their corporate strategies. That is par for the course. Nikola, for its part, was scheduled to present on Wednesday at the Deutsche Bank investor conference, its first large public presentation since completing the Vector merger.

Nikola shares were taking a small hit in premarket trading, down about 0.9%. S&P 500 futures, for comparison, were up 0.3% and Dow Jones Industrial Average futures were up 0.1%.

In addition to Left’s tweet, Nikola stock might be reacting to reports that Tesla’s (TSLA) all-electric heavy-duty truck is being brought into production. The semi-tractor-trailer truck, introduced around 2017, is likely to be used for shorter hauls of less than 300 miles. Intermodal shipping giant J.B. Hunt Transport Services (JBHT) signed up as an early customer for the truck.

Intermodal refers to freight transported by highway and rail. J.B. Hunt moves a lot of freight between trucks and trains.

Tesla wasn’t immediately available to comment on the reports.

New stocks like Nikola are often volatile and driven by news flow. That seemed to be the case Wednesday. Investors should prepare for more such days. Over the long run, of course, Nikola’s business execution will determine the value of its shares.

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