Pumping the brakes on the stock's wild ride this past month, investors have sent shares of Nikola Corporation (NASDAQ:NKLA) lower by more than 20% over the past five days as, among other things, news hit that investors could soon suffer dilution. Wall Street, however, thinks that shares are bound to bounce higher. Jeffrey Osborne, an analyst at Cowen, has initiated coverage on the stock, assigning an outperform rating and a $79 price target.
For Osborne, Nikola's stock represents an "intriguing investment opportunity." In a research note to investors, Osborne notes that by using a one track platform, two power train options, and gaining "optionality" in servicing the powersports, pickups, and autonomous vehicles markets, the company is reducing the risk it will face as it scale up production of its vehicles in 2021.
Nikola doesn't currently have any vehicles on the road and hasn't yet generated revenue, so a cautious approach to production seems well-warranted.
Since the stock's trading history is limited and the company doesn't generate sales, the valuation of the stock is extremely challenging. Investors should, therefore, exercise caution. In fact, Andrew Left, founder of Citron Research, believes the stock is headed in the opposite direction, expecting it to fall to $40 in the coming weeks.
For investors who are torn between the bullish and bearish takes which Wall Street is espousing, it will be valuable to follow what the company reports when the rubber hits the road on June 29, when it begins to take orders for the Badger pickup truck.