CNBC- Investors are selling shares of Nikola following the company’s first quarterly report as a public company, but major Wall Street firms think the stock is still a buy, and that the sell-off offers an attractive entry point.
The stock fell more than 15% during early trading on Wednesday.
“There are catalysts immediately ahead, and we therefore recommend accumulating shares in NKLA,” said JPMorgan, while Deutsche Bank said the the stock continues to offer a “favorable near term set up.”
The battery-electric and hydrogen-powered truck maker reported an adjusted loss of 16 cents per share for the second quarter, but analysts note that this shouldn’t have sent the stock meaningfully lower since the company was always expected to report a loss.
Cowen’s Jeffrey Osborne, who has an outperform rating on the stock, chalked up some of the factors that led to the steep selloff in extended trading to a ”‘new’ IPO and a company without a full time IR role” since there could have been clearer communication from the company. He noted that items such as the updated share count, as well as false reports that notable investor Jeffrey Ubben liquidated his position in Nikola, fueled the frenzied after-hours trading. Filings on Tuesday night showed that ValueAct suddenly had no position in Nikola, but it wasn’t a sale — just a transfer of general partner. Ubben decided to step down from ValueAct in June in order to launch Inclusive Capital Partners, so the Nikola position was simply transferred to his new fund.
“We believe the optics of these two matters made the RobinHood/retail crowd head to the exits,” he said, before adding that it opened up a buying opportunity for other investors.
For now, all three firms pointed to catalysts in the coming months that could push shares higher.
Idk what’s confusing about a company with $36,000 in revenue, no product, no patents, no prototypes, and no solid plan being worth $20,000,000,000.