Apparently, after CNBC’s LeBeau commented “Don’t be surprised if $GM takes a greater than 11% stake in NKLA”, NKLA has jumped 10% easy.
Ummmm, for those buyers on this headline, do you still remember what the deal was?
Here is the link to the SEC 8-K report sec.report/Document/0001104659-20-102820/, which should give you the most offcial information on the deal.
To sum it up, NKLA was going to give, GIVE, NOT SELL, 2 billion USD worth of stocks to GM, for 0 cent in return. In addition, GM will also be paid to supply batteries and manufacture NKLA’s trucks. And GM will also receive Nikola’s emission credits, which if you remember, emission credit was the only reason Tesla reported positive earnings in Q2. Without emission credit, TSLA will be at a loss in Q2.
This is a shit deal for Nikola. So why would NKLA have agreed to this? Because NKLA has no capability to build a truck by itself. It only knows how to integrate. In order to build the Nikola Badger, it has to partner up with GM. NKLA simply CANNOT do this job by itself.
Now, frauds claims have plagued NKLA’s stocks for weeks. If you are Mary Barra (GM CEO), do you have to walk away from the deal? Hmmm. Why would you? Why would you walk away from 2 billion dollars for free PLUS free emission credits PLUS a customer for your battery business? You have nothing to lose here, except for some reputation, since Barra said “appropriate due-dillgence” was done. But hey, what due-dilligence needs to be done? NO DUE-DILLIGENCE needs to be done. If you have nothing to lose in a deal, and you can walk away freely, why would you need to do any due-dilligence?
Now, since the deal has not been closed, and NKLA’s share has plummetted more than 50%. If you are Mary Barra, who wants to continue to pursue this “no-lose” deal anyway, WOULD YOU STILL ACCEPT THE OLD TERMS? Hey, Nikola, you agreed to give me 2 billion worth (or 11%) of stake when the company was worth 20B, now your company is worth 7B, OF COURSE I WANT MORE THAN 11% OF YOUR DAMN STAKES NOW right? Original 2 billion worth of stocks will now be 27% of the company.
And now, CNBC’s LeBeau says, “GM may take more than 11% stake on NKLA”. Hey bro, I need you to tell me this shit information? Yeah, the stock is 10% up now. But wait a minute, how can this shitty deal, which now benefits GM even more, benefit NKLA in anyway at all? Nope, I dont’t see it.
Maybe the LeBeau guy is long NKLA stocks, now he plays with words to fool you retards. Headlines easily fool retards. Why spend ten minutes reading into the story and doing the thinking, while you can simply make your investment decision after spending 10 seconds reading a headline? (I mean, just look at SNOW’s rise 2 days ago)
In the end, I simply can’t emphasize enough, this deal is sweet for GM but HORRIBLE for NKLA. But NKLA has to accept it because it is desperate. It’s simply unable to build trucks by itself.
Risk disclaimer: I am not telling you NKLA share will go down. Although I am short NKLA, the greater fool theory tells us, as long as there are more people misunderstanding the headline, the stock may go up. Invest with caution.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.