Nikola shares fell again this week. Here’s why.

Nicholas (NKLA -6.74%) — yes, this company is still publicly traded — is down more than 20% again this week, according to data from S&P Global Market Intelligence. The hydrogen-electric truck startup continues to inflate its outstanding stock, insiders continue to sell, and the company is nowhere near turning a profit. No wonder the stock is down more than 99% from its all-time highs.

The stock continues to drop and still has work to do because this is not a real deal. Here’s why.

Inside sales and poor business results

Insiders continue to sell at Nikola. This week, the COO, CFO and chairman — all important roles — proposed selling some of their stakes in the company.

Insider selling in a stock down 99% is never a good sign. Typically, you would want a management team that is confident in a business even if the stock is down, which would mean inside information. buy. This is the opposite.

It’s clear why management is selling the stock: the business is very far from turning a profit. Last quarter, Nikola posted revenue of just $31 million and a net loss of $134 million. In the last 12 months, it burned through $500 million in free cash flow from sales of less than $50 million.

Hydrogen-fueled trucks are its main products and look set to disrupt the transportation market. This has been said for years. The problem is that this is not a technology that really works.

Nikola has never generated much revenue and continues to burn through cash. It’s no surprise then to see stocks down more than 99% from all-time highs.

Take a good look at the shares in circulation

Let’s close Nikola with a lesson on floating shares. If you are an outside shareholder of a stock, you want the shares outstanding to decrease through share buybacks. That way, you own more and more of the business every year.

It’s a red flag if a company’s outstanding shares keep rising because it shows it needs to sell more shares to other people to finance operations. Profitable companies don’t have to do this.

Nikola’s outstanding shares have increased by 300% in recent years. This is a huge red flag, and it happened because the company is burning so much free cash flow. It continues to run out of cash and then sells stock to avoid a bankruptcy filing.

All of this means that this is not a stock you want to own for the long term.