Shares of Nikola (NASDAQ:NKLA) fell 10% on Wednesday morning after the electric truck start-up lost a massive order from waste collection company Republic Services (NYSE:RSG). The growth story investors eagerly bought into earlier in the year continues to crumble, and Nikola shares are falling as a result.
Nikola was flying high in August when it announced a deal with Republic Services to develop and manufacture 2,500 waste and recycling collection trucks, breaking into a huge potential market for EVs.
But a lot has changed since then. Nikola was hit by an attack by a short-seller accusing the company of overhyping its products and technologies in investor demonstrations. Founder and former executive chairman Trevor Milton left the company under a dark cloud, and a deal struck with General Motors to source much-needed technologies was downsized.
The Republic Services news is just the latest dent. Nikola said Wednesday morning the two sides have discontinued their collaboration after determining the project would take longer than expected to develop and would involve unexpected costs.
"This was the right decision for both companies given the resources and investments required," Nikola CEO Mark Russell said in a statement. "Nikola remains laser-focused on delivering on our battery-electric and fuel-cell electric commercial truck programs, and the energy infrastructure to support them."
Republic is also investing in Romeo Power, a manufacturer of batteries for trucks set to go public via a merger with RMG Acquisition.
Nikola made a big splash when it first went public earlier this year, but with each bit of new information coming out it is increasingly more difficult for investors to get excited about the company.
There is still a real business there, but with each lost contract the near-term revenue potential is falling. Nikola even after the drop Wednesday morning is still valued by the market at more than $6.5 billion, meaning it is hardly a bargain even after the fall.
Investors are understandably are heading for the exits, preferring to watch this story play out from the sidelines.