Nikola: Lower-than-Expected Q1 Loss; What’s Next?

Providing zero-emission transportation solutions and moving toward green technologies, Electric vehicles (EVs) will transform the automotive industry completely. Though most of the manufacturers are still in the hypothetical stage, others are in the nascent stage of beginning production. 

Struggling with a plethora of challenges, including inflationary pressures and supply chain constraints, most of these EV stocks are trending lower but are striving hard to ease the impact of disruptions and ramp up production. 

Nikola Corporation (NASDAQ: NKLA) is among such EV manufacturers. It is engaged in the manufacturing of heavy-duty commercial battery-electric vehicles, fuel-cell electric vehicles, and energy solutions. 

The company reported a lower-than-expected loss for the first quarter of 2022. Also, revenues beat analysts’ expectations. 

Following the update, shares of the EV truck startup rose 6.4% to close at $7.66 on Thursday. However, the stock is down about 10% today, giving back all of its gains.

Results in Detail 

Nikola recorded an adjusted loss of $0.21 per share, lower than the Street’s estimated loss of $0.25 per share. The company reported an adjusted loss of $0.14 in the same quarter last year. 

Additionally, quarterly revenues of $1.89 million beat the consensus estimate of $180,000. In late March, the company initiated production of its battery-electric Tre semi-truck and shipped the first 11 trucks to dealers in April. Though first-quarter revenues do not include revenue from these deliveries, the company recognized about $1.9 million in services-related revenue. 

Adjusted EBITDA came in at a loss of $79.2 million, compared with $53.4 million in the same quarter last year. 

Outlook 

Encouragingly, the CEO of Nikola, Mark Russell, said, “During the first quarter, we reached a significant milestone with the start of serial production for the Nikola Tre BEV at our Coolidge, Arizona manufacturing facility and are currently delivering saleable trucks to dealers for customer deliveries.” 

“We look forward to scaling production and delivering 300 – 500 production vehicles to customers this year,” Russell added. 

Wall Street’s Take 

Overall, the stock has a Hold consensus rating based on one Buy and eight Holds. The average Nikola price target of $11.13 implies 61.8% upside potential from current levels. Shares have declined about 30% year-to-date. 

Nikola’s Smart Score 

According to TipRanks’ Smart Score system, Nikola scores a 5 out of 10, which indicates that the stock is likely to perform in line with market averages. 

The Bottom Line on NKLA Stock

Global supply chain and logistics challenges were aggravated due to the COVID-related factory shutdowns in China and the war in Ukraine. This, in turn, created additional disruptions and cost pressures for companies such as Nikola. Though conditions still remain uncertain, the company remains focused on its production goals. 

Consequently, with the current stock price performance, analyst ratings, decent results, and production outlook as factors in consideration, investors might expect shares to trend higher. 

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