Where will Nikola Stock be in 3 years?

Nicholashis (NKLA -0.78%) the stock has fallen nearly 99% over the past three years. The electric semi-truck maker was a red-hot stock during the speculative stock-buying frenzy of 2020, but has run out of steam after missing production forecasts.

After that steep decline, Nikola’s stock now trades at just twice this year’s sales. Could this downed EV stock unexpectedly rekindle over Next three years?

Image source: Nikola.

What happened to Nikola in the last three years?

Like many electric vehicle start-ups, Nikola went public through a merger with a special purpose acquisition company (SPAC) and set some overly ambitious long-term goals. In its 2020 pre-merger presentation, it claimed it could deliver 600 battery electric trucks (BEVs) in 2021, 1,200 BEVs in 2022 and 3,500 BEVs in 2023. It also planned to deliver 2,000 of hydrogen fueled by fuel cells. electric trucks (FCEV) in 2023.

But in reality, Nikola didn’t deliver a single BEV in 2021. It delivered just 131 BEVs in 2022 and 79 BEVs in 2023 before a series of battery fires forced it to recall most of those vehicles. It delivered only 35 FCEVs in 2023. That’s why the company has barely generated revenue as it has made catastrophic losses for the past three years.

Data source: Nikola.

Nikola has also been led by three different CEOs since its public debut, and its founder Trevor Milton was convicted of securities and wire fraud in 2022. As it racked up bigger losses, it grew its despair the number of shares outstanding by 278% in the past. three years to raise fresh cash through share sales and secondary offerings.

While Nikola struggled to stay solvent, its larger competitor The Daimler truck has stepped up deliveries of the Freightliner eCascadia electric semi truck to dozens of large corporate customers such as UPS, Walmartand Sysco. adze it also unveiled its first Semi model in late 2022 and plans to begin mass production of this highly anticipated vehicle in 2025. This intense competition could crush Nikola before it ever expands its business.

So what will happen to Nikola in the next three years?

Nikola is trying to differentiate itself from these competitors by selling more hydrogen-powered FCEVs. FCEVs can be charged faster than BEVs and have a much longer driving range, but require the construction of more capital-intensive hydrogen charging stations. Nikola has worked with hydrogen company Voltera to build a network of 60 hydrogen charging stations in the U.S. by 2026, but that’s an expensive effort that will compound its short-term losses.

Nikola expects to continue selling more FCEVs as it works to end the BEV recall by the end of 2024. After ending that recall, it plans to launch the “2.0” version of its BEVs to keep up with Daimler Truck and Tesla in semi-electric market.

That plan seems to be working. Its deliveries rose 49% year-over-year to 113 trucks (all FCEVs) in the first half of 2024, and its revenue rose 49% to $38.8 million. Analysts expect its revenue to nearly quadruple to $133.5 million for the full year.

Nikola remains deeply unprofitable, but its adjusted margin before interest, taxes, depreciation and amortization (EBITDA) improved year-on-year from negative 879% to negative 550% in the first half of 2024 as its tightened spending. For the full year, analysts expect it to post a negative adjusted EBITDA margin of 291%.

Assuming Nikola can expand its business, analysts expect its revenue to grow about triple to $406.5 million in 2025 and more than double to $934.2 million in 2026. By the final year, adjusted EBITDA margin is expected to improve to negative 17%. If it still trades at twice sales by then, its market cap could grow nearly sevenfold to $1.8 billion.

But it could still be hard for Nikola to ramp up production without running out of cash. It had $256.3 million in cash and cash equivalents at the end of its most recent quarter, but still carried $586.4 million in total debt. Analysts also expect it to post a steep net loss of $493 million for the full year. Therefore, Nikola may need to take on much more debt and continue to dilute its shares to remain solvent.

Where will Nikola’s stock be in three years?

Nikola’s stock could rise if he gets his act together. But they also face formidable competitors and may struggle to expand their business. Its unsavory strategic changes under three different CEOs make it difficult to trust its long-term growth strategies, and insiders notably haven’t bought a single share of its battered stock over the past 12 months. So for now, I think Nikola’s stock will stagnate for the next three years, unless a lot of green shoots appear.