Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of VectoIQ Acquisition Are Falling Today

By John Rosevear - Mar 9, 2020 at 1:23PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The oil crash complicates things for the soon-to-be electric-truck maker.

What's happening

Shares of VectoIQ Acquisition (VTIQ), a holding company that is in the process of acquiring electric-truck maker Nikola Motors, were down sharply on Monday as crashing oil prices and virus concerns drove a broad-based market sell-off.

As of 1:00 p.m. EDT, VectoIQ's shares were down about 11.8% from Friday's closing price.

So what

VectoIQ's shares soared last week after news that the company, led by former General Motors (GM -5.05%) vice chairman Steve Girsky, had agreed to acquire Nikola. Nikola has been preparing to begin production of electric heavy trucks (think tractor-trailers), including models powered by hydrogen fuel cells and by lithium-ion batteries.

A Nikola tractor-trailer truck.

Nikola's heavy trucks are powered by electricity. Image source: Nikola Motors.

Nikola, which has strong technology and partnerships with industry heavyweights, is expected to have a bright future. But it's no surprise that the steep drop in oil prices -- along with the possibility of a recession -- has put a damper on investors' expectations in the near term.

Now what

The deal is still expected to proceed: VectoIQ's acquisition of Nikola should close in the second quarter of 2020, after which the combined company will be renamed "Nikola Corporation." That company will trade on the NASDAQ exchange under the ticker NKLA -- but whether investors will be eager for its shares remains an open question for now.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

VectoIQ Acquisition Corp. Stock Quote
VectoIQ Acquisition Corp.
General Motors Company Stock Quote
General Motors Company
$31.76 (-5.05%) $-1.69

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.