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   Technology StocksNikola Corp

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From: kidl9/21/2020 10:10:17 AM
   of 249
Nikola defended at JPMorgan, GM punished for partnership ties

Sep. 21, 2020 9:18 AM ET|About: Nikola Corporation (NKLA)|By: Clark Schultz, SA News Editor

Just days after saying it had a reassuring talk with Nikola's (NASDAQ: NKLA) CFO, JPMorgan cuts its price target on Nikola to $41 from $45, but keeps the faith with an Overweight rating.

Analyst Paul Coster: "We believe the inbound Chairman, a former GM board member, is probably better suited to the next – execution – phase of the company's development, but Trevor Milton's resignation could weigh on some of the partner and customer relationships he has forged, and employee morale is probably fragile right now, just as the workload is intensifying and competitive threat looms. We increased the discount rate in our PV calculation of stock value by 10% to 22%, but left the business model and forward valuation multiple unchanged, on the assumption that the company will still execute to plan given that most developments to date have slightly exceeded our expectations, that is with the exception of Mr. Milton's social media and marketing missteps."

Shares of Nikola are down 26.88% premarket to $25.00. Meanwhile, General Motors (NYSE: GM) is off 4.25% to bleed off its recent gains with its Nikola partnership looking different over the last week. The drop for GM is bigger than what its Detroit are seeing in the early session.

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To: kidl who wrote (128)9/21/2020 4:28:23 PM
From: Glenn Petersen
   of 249
About fifteen years ago, there were quite a few SPAC frauds, There were several Chinese companies that did SPAC deals that were subsequently exposed as paper frauds. One of the problems is that the companies going public via the SPAC route are not put through the investment bank and SEC due diligence grinders. I'm not saying that NKLA is a fraud - I would be very surprised and disappointed if GM did not thoroughly vet the technology - but CEOs that heavily promote their stocks before showing substantive results always make me nervous. A sign of me age, no doubt, and apologies to Elon Musk, the exception to all man-made rules.

Nikola saga hits three speculative areas at once: SPACs, Robinhood traders and electric vehicles

Pippa Stevens @PIPPASTEVENS13


-- In recent months, three story lines have captivated Wall Street: SPACs, electric vehicle companies and the rise of retail traders.

-- The outsized success of the first two, as well as novice investors entering the market in record numbers, has led some investors to claim this is an indication of froth.

-- One name symbolizes all three themes: Nikola Corporation.The stock’s well-charted rise, and subsequent fall amid accusations from a short-selling firm that led to the founder and executive chairman’s resignation on Monday, begs the question over whether skeptics are right and that these three areas do indicate an overheated stock market.
In recent months, three story lines have captivated Wall Street: SPACs, electric vehicle companies and the rise of retail traders. The outsized success of the first two, as well as novice investors entering the market in record numbers, has led some investors to claim this is an indication of froth.

And one name symbolizes all three themes: Nikola Corporation.

The stock’s well-charted rise, and subsequent fall amid accusations from a short-selling firm that led to the founder and executive chairman’s resignation on Monday, begs the question over whether skeptics are right and that these three ares do indicate an overheated stock market.

The battery-electric and hydrogen-powered truck maker has attracted much fanfare since going public on June 4 through a reverse merger with special purpose acquisition company VectoIQ. The apparent success of Nikola’s debut — as evidenced by investors rushing into the stock and bidding shares higher — kicked off a wave of announcements from electric vehicle start-ups that they, too, planned to go public through mergers with special purpose acquisition companies.

A few days after Nikola began trading shares soared to an all-time high of $93.99, for a gain of more than 170%. At one point Nikola had a market capitalization above Ford’s, despite the fact that the electric vehicle maker said it would not generate revenue until 2021. The stock topped the charts on Robinhood, the trading app popular with millennial retail investors.

The company’s verbose founder and one-time executive chairman Trevor Milton frequently took to Twitter to tout both the company’s progress and promises. And there has been notable progress towards the company’s vision of transitioning away from fossil fuels: in August Nikola announced that it will provide at least 2,500 all-electric refuse trucks for Republic Services, and earlier in September GM said it was taking an 11% stake in the company, which some on the Street said validated Nikola’s business model.

But things began to unravel on Sept. 10 when short-selling firm Hindenburg Research released a report accusing the company of making false statements about its technology. The findings have, in short order, reportedly kicked off investigations from the SEC and DOJ, and led to Milton announcing on Monday that he would voluntarily step aside from the company.

Shares of Nikola plunged more than 22% during early trading on Monday, and traded around $26.40, a price not seen since May before the merger was complete.

Nikola pushed back on Hindenburg’s claims and the SEC routinely looks into companies, meaning an investigation is not necessarily a sign of wrong doing. Amid the turmoil JPMorgan reiterated its buy rating on the stock on Monday saying Nikola’s new chairman, Stephen Girsky, who is a former vice chairman of General Motors and a member of Nikola’s board, may be a “better fit for [the] execution phase.”

But the current rout of Nikola’s shares shines a spotlight on the potential dangers of SPACs and electric vehicle companies, as well as the role of retail investors in the market.


Special purpose acquisition companies are on track for a record year amid market enthusiasm for these investment vehicles, which are also known as blank-check companies since investors hand over money without knowing when, or even what for, their capital will be used.

A number of high-profile investors are leading the charge, including Pershing Square’s Bill Ackman and Starboard Value’s Jeffrey Smith. Former House Speaker Paul Ryan has also launched a SPAC, as has Oakland A’s executive Billy Beane of “Moneyball” fame.

On Friday, filings with the Securities and Exchange Commission showed that three SPACs backed by Chamath Palihapitiya are looking to raise $2 billion.

U.S.-listed blank check companies have already raised $38.6 billion this year, which is a 270% jump from 2019's total, according to data from Refinitiv.

The surge in SPACs comes amid heightened market volatility in the wake of the coronavirus pandemic. For the company the SPAC is targeting, it’s a way to go public on an often accelerated timeline, and without having to jump through all of the SEC’s regulatory hoops.

SPACs have traditionally had a somewhat mixed reputation on the Street since the terms can tilt in favor of the sponsor, and they can also be risky given the unknown end target.

“While we are certain that some would disagree with us, we also get a bit worried when the issuance of SPACs surge,” Tobias Levkovich, Citi’s chief U.S. equity strategist, said in a recent note. “We fully understand the opportunistic nature of such fund raises, but we get concerned about giving people blank checks on deals that may or may not be done successfully in the future. ...There is a speculative element here (even with strong sponsors and good managers),” he added.

With a new SPAC seemingly announced daily, former Trump economic adviser Gary Cohn — who himself has launched a SPAC — told CNBC that not all of them are going to “make it over the finish line.”

Electric Vehicles

The attention that Nikola got when it entered the public market, which kicked off a number of other electric vehicle start-ups seeking the same route, has led to calls that there are now simply too many players.

Speculation around electric vehicle companies is nothing new, of course. Tesla is perhaps the poster child — the company and its founder Elon Musk have fervent support on one side, with vocal doubters on the other side. While the stock has experienced some recent weakness, it’s still up more than 400% this year. Wall Street analysts frequently cite the company’s valuation as indication that it trades on emotion rather than fundamentals.

Still, on the heels of Tesla’s success this year and Nikola’s attention-attracting public debut, electric vehicle start-ups have rushed to take advantage of enthusiasm in the market. China-based Nio, which is a Tesla competitor, has seen its stock surge more than 380% this year, while shares of EV company Workhorse Group, which focuses on last mile delivery, have skyrocketed more than 900%.

To name a few of the coming EV/SPAC deals: Spartan Energy Acquisition and Fisker, DiamondPeak and Lordstown Motors, Canoo and Hennessy Capital Acquisition Corp IV, as well as Tortoise Acquisition Corp. and Hyliion.

These companies all have bold visions for what the future of mobility will look like. But it remains to be seen whether they can execute on these promises. Tesla in July posted its fourth straight quarter of profits, but it took the company a decade to reach that milestone. The company’s production and delivery issues in the past demonstrate the difficulties in bringing new vehicles and untested technology to the market.

Retail investors

Retail investors were among those to pile into shares of Nikola around the debut, according to data from now defunct Robintrack.

The accessibility and ease of trading apps like Robinhood have led many to speculate that wild swings in speculative stocks including Nikola, Kodak, and Virgin Galactic, among others, are fueled by novice retail investors.

Nikola’s average volume over the last 10 trading days has come in at 53.2 million shares, though it has only about 361 million shares outstanding.

Individual investors have also been said to be behind the trading frenzy that pushed the Nasdaq Composite to a record high mere months after the coronavirus pandemic sent stocks tumbling.

Japan’s SoftBank has since been identified as reportedly driving much of the action through hefty bets on stock options, but there’s no question retail investors also played a role in the comeback from the March lows.

Trading apps like Robinhood have made the public market more accessible to novice investors, but heavy losses have also been reported on the platform from those who might not understand the intricacies of the market.

In June, CNBC’s Jim Cramer warned that Wall Street professionals could take advantage of amateur investors by bidding up shares of companies that were popular at the time on the app.

“It’s a game. If it weren’t securities, let’s say it was Monopoly, let’s say it’s DraftKings ... it would be so much fun,” he said on “Squawk Box.” “Pick a couple of stocks, you gun them in the morning, and then you hope people are stupid enough and they buy them.”

- CNBC’s Yun Li contributed reporting.

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To: Glenn Petersen who wrote (129)9/21/2020 4:47:14 PM
From: kidl
   of 249
Remaining NKLA bulls seem to largely hang their hats based on the GM deal which imho is a huge mistake. The structure of this deal shields GM from any financial downside while providing sizeable upside if NKLA succeeds. GM’s only real downside is a loss in management / BOD credibility if NKLA fails.

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From: Julius Wong9/21/2020 4:48:56 PM
   of 249
Nikola details terms of Milton's split from the board

Nikola (NASDAQ: NKLA) updates in a SEC filing on the terms associated with the exit of Trevor Milton from his executive chairman position at the company.

"Milton voluntarily stepped down from his position as Executive Chairman of the Company and all positions as an employee and officer of the Company and its subsidiaries, and his position as a director on the Board and as a director of any of the Company’s subsidiaries, including all committees thereof, in each case, effective as of September 20, 2020. Mr. Milton will be making himself reasonably available to provide consulting services and to assist the Company as reasonably requested by the Board on an ad hoc basis through December 31, 2020."

"Milton expressed his desire to relinquish, and pursuant to the Agreement, Mr. Milton agreed to relinquish 100% of the 4,859,000 performance-based stock units granted to Mr. Milton on August 21."

Milton also agreed to certain standstill provisions and said he would vote his shares with the board recommendations for director slots.

Shares of Nikola are down 3.95% AH to $26.49 after a 19.33% drop during the regular session. Volume on Nikola was over 86M today vs. the normal daily average of about 24.9M.

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To: kidl who wrote (130)9/21/2020 5:08:07 PM
From: Glenn Petersen
   of 249
I almost bought NKLA today for a dead cat bounce, but came to my senses.

The NKLA debacle didn't do any significant damage to the other SPAC/EV deals.

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From: kidl9/23/2020 8:29:57 AM
   of 249
Nikola partners still firmly on board per CFO

Sep. 22, 2020 3:52 PM ET|About: Nikola Corporation (NKLA)|By: Clark Schultz, SA News Editor

Nikola ( NKLA +2.9%) CFO Kim Brady says the company still has the support of all its automotive partners, despite the abrupt departure of founder Trevor Milton.

"We feel very confident about due diligence that has been performed by our partners, and as you can see, our partners have been 100% supportive and behind us," stated Brady earlier today at a conference hosted by Evercore ISI.

Brady noted that both Bosch and GM were "incredibly thorough" in terms of their due diligence of Nikola.

"We recommend that investors really focus on the future, and what we have delivered, and what we are going to deliver," he added.

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From: kidl9/23/2020 11:38:52 AM
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To: kidl who wrote (134)9/23/2020 1:36:10 PM
From: JubilationT
   of 249
Didnt know that the deal has not been finalized giving GM an out if they choose to.
I am now sitting on the sidelines.

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From: Julius Wong9/23/2020 4:25:37 PM
   of 249
Nikola turns lower after WSJ warns on stalled talks with potential partners

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To: JubilationT who wrote (135)9/23/2020 6:15:10 PM
From: kidl
   of 249
The sidelines ... Good move.

I have been on the sidelines for a couple of months aside from a few day trades but turned to the "dark side" as soon as I saw Nikola's pathetic Hindenburg rebuttal.

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