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Why Nikola Stock Popped, but Tortoise Acquisition Stock Dropped on Tuesday

By Rich Smith – Updated Jun 23, 2020 at 5:01PM

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Investors begin to differentiate between the two electric truck techs.

What happened

The IPO-by-reverse merger planned between Hyliion and Tortoise Acquisition (SHLL) later this year is going to be "directly comparable" to the reverse merger between VectoIQ and Nikola Corporation (NKLA -1.40%) that took place earlier this year, say PR firms representing Hyliion and Tortoise.

In so saying, investor expectations that Tortoise, like VectoIQ and Nikola before it, could soon enjoy a 100% or better stock price gain. But today, investors are starting to wonder if that's true.

Red arrow swoops up and blue arrow swoops down.

Image source: Getty Images.

So what

In trading Tuesday, you see, shares of Tortoise Acquisition (which has yet to effect its electric truck company merger) and shares of Nikola (which already has) moved in exactly opposite directions. Nikola stock closed the day up 7.2%, but Tortoise rolled downhill 4.9%.

Why might that have happened? The easy answer is that Tortoise investors simply decided to take some of the profits (that they've earned from the stock's 70% surge in price in the five days since announcing its reverse merger) off the table. But that doesn't explain why Nikola stock, which is up more than twice since early this month, didn't retrace as well.

Now what

If you ask me, it's at least possible that investors have begun taking a closer look at these two trucking stocks, and the two renewable energy technologies they're offering, and deciding they like one better than the other.  

In the case of Nikola, investors remain wowed by the company's promise to build an entirely battery-operated semi-tractor trailer system -- and then another tractor trailer that runs on fuel cells!. Hyliion's technology is basically retrofitting existing trucks with an "electric axle" that stores energy accumulated when a truck is coasting downhill in a battery, for use assisting climbing the next hill. Compared to what Nikola is offering, Hyliion's offer kind of looks passé. It kind of looks oversized Toyota Prius.

Hyliion argues that its tech is both proven (see the Prius) and useful, and could conceivably save truckers as much as 15% in fuel costs through increased fuel efficiency -- without the added cost of requiring truckers to buy entirely new trucks. But today at least, investors appear to prefer the shiny and new over tried and true hybrid-electric tech.  

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Nikola Corporation Stock Quote
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