JP Morgan launches hedge on Nikola, sees shares fall around 30%
It was a busy month for Nicholas (NASDAQ: NKLA). After completing its merger with VectoIQ Acquisition earlier this monththe title received a vote of confidence of Cowen. In contrast, Nikola received scrutiny by Citron Research, among others. Bears roared even louder today as additional skepticism about the stock came from Paul Coster, an analyst at JP Morgan who initiated a hedge on the stock with a neutral rating and a price target of $45. With shares opening at around $66 today, Coster’s price target represents a decline of around 30%.
In Coster’s view, Nikola’s disruptive approach to the transportation industry “could be compelling” as it works to develop hydrogen infrastructure to meet the needs of fuel cell electric trucks; however, Coster acknowledges that considerable risk surrounds the business that is not currently generating revenue.
For investors who know the stakes Clean energy fuels (NASDAQ:CLNE) met over the past decade as it attempted to develop a network of natural gas service stations for long-haul truckers, Coster’s circumspection of the business makes sense. However, investors should always remember to exercise caution when taking an analyst’s view of a stock, including the price target, as their time horizons are often shorter than holding periods. multi-year preferred by The Motley Fool.
Although shares could drop a bit if the company doesn’t signal strong demand for its Badger pickup truck when it starts accepting reservations for it on June 29 and hiccups in building its infrastructure could inspire sales. in the short term, those bullish on the stock should base their investment thesis on the long-term potential for the company to cause a considerable shock to the transportation industry – and profit from it.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.