Shares of electric-vehicle company Nikola Corporation (NASDAQ:NKLA) were moving higher in early trading on Monday. It's likely that investors are excited because the Nikola Badger, a pickup truck, became available for preorder starting today.
As of 10:30 a.m. EDT, Nikola stock was up 11%. However, for 2020, the stock is up almost seven times in value.
If Nikola is going to be a winning investment, it needs a product that appeals to the masses. Preorders for its Nikola Two, a semitruck, are strong with 14,000 reserved. And the company believes those orders could result in $10 billion in revenue once fulfilled. However, semitrucks are a limited market.
A pickup truck for the masses could find a much larger audience. The Badger will come in two different electric models: one with a battery and one with a hydrogen fuel cell. The battery-powered Badger is expected to get 300 miles on a single charge, while the hydrogen fuel cell model should go twice as far.
To reserve a Badger, consumers will have to put down a $5,000 deposit. And with a deposit, one lucky Nikola adopter will win a Badger when it's unveiled to the public during an event called Nikola World in December.
Rome wasn't built in a day; every milepost on a journey is meaningful. And making the Badger available for preorder is part of the journey for Nikola Corporation. Investors are right to be encouraged by this step.
That said, there is still a long road ahead of Nikola to see its vehicles widely adopted, generate meaningful revenue, and earn profits for shareholders. The Badger hasn't gone into production yet, and reservations are susceptible to cancellations. Furthermore, the company still needs to build out a hydrogen station network to provide necessary infrastructure for its vehicles. Those are all important steps this automotive stock has yet to take.