What happened

Investors continue to process Nikola's (NASDAQ:NKLA) breakup with Republic Services (NYSE:RSG), and they don't like what they are seeing. Shares of the electric-truck manufacturer traded down 5.5% on Thursday and were off as much as 10% earlier in the session.

So what

Nikola shares were under pressure on Wednesday after the company said its deal with Republic to develop and manufacture 2,500 waste and recycling collection trucks had fallen through. The company was flying high back in August when the deal was announced, but in the months since, the enthusiasm about the stock has collapsed.

A prototype Nikola truck

Image source: Nikola.

Nikola was the target of a short-seller attack accusing the company of overhyping its products and technologies in investor demonstrations. Founder and former executive chairman Trevor Milton left the company in September, and a deal struck with General Motors to source much-needed technologies was downsized.

The Republic deal termination is just the latest bit of disappointment. Loop Capital analyst Jeffrey Kauffman in a note out Thursday said the announcement is "another setback in a series of setbacks," though he remains optimistic about Nikola's long-term prospects.

Kauffman notes that the Republic deal was not baked into the company's guidance, and management said it expects to announce other customer orders in early 2021. The analyst reiterated his buy rating on the stock, with a price target of $35.

Now what

Kauffman's optimism is understandable, as there is the potential for a real business contained within Nikola. But a lot has to go right in the quarters to come for the company to turn into the growth stock that investors had once imagined. The stock is down more than 80% in the last six months, and with good reason.

For those who want to speculate on the potential, Nikola shares could work as a small part of a well-diversified portfolio. But it is understandable that many investors have decided to watch from the sidelines after all that has happened.