Please ensure Javascript is enabled for purposes of website accessibility

Why Nikola Stock Popped, While Fisker and Lordstown Dropped Today

By Howard Smith - Apr 22, 2021 at 1:51PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

While Nikola announced a deal to help the future of its fuel cell products, a downgrade hit the other electric vehicle makers.

What happened

While electric vehicle start-up companies seemingly have a lot of potential, until there is progress with the products themselves, many trade on analyst opinions and speculation. Today, three such companies are experiencing a mix of news and downgrades. Nikola (NKLA -0.84%) reported a new business collaboration Thursday, and shares were trading up 19% as of 12:35 p.m. EDT.

Fisker (FSR -0.23%) and Lordstown Motors (RIDE 1.27%), however, were hit with an analyst downgrade today, and traded as much as 13% and 6% lower, respectively. Those declines eased throughout the day, and Fisker was down about 7% while Lordstown was back to even as of 12:35 p.m. EDT.

So what

Nikola announced today it has begun a partnership with TravelCenters of America (TA 1.51%) as a first step in developing a nationwide network of hydrogen fueling stations. 

Meanwhile, Fisker and Lordstown were both downgraded by Goldman Sachs today. Though the firm remains "very constructive" on the electric vehicle (EV) sector, it moved Fisker down to a sell recommendation, and Lordstown to neutral, according to CNBC. Goldman also dropped its price targets on both to $10. That represents 34% downside from Wednesday's closing price for Fisker; Lordstown is already trading around that level.

Nikola Tre and Two semi trucks

Image source: Nikola.

Now what

After much investor exuberance with the EV sector last year, many of the stocks of companies that have yet to sell a product have come down hard. The legitimacy of both Nikola and Lordstown has been questioned by the same short-seller, Hindenburg Research. Lordstown's prototype Endurance truck just bailed out of a highly hyped off-road race, which contributed to why Goldman has turned more cautious. Goldman also reiterated one of Hindenburg's concerns that Lordstown's production timeline might be too aggressive. 

All of these names are now in "show-me" mode for investors. Until their products are commercialized, or at least progress is documented, investors are seemingly going to remain cautious. Fisker doesn't plan to have production of its all-electric Ocean SUV begin until late 2022. Nikola's news regarding hydrogen fueling infrastructure is positive, but the stock's big move today is likely partially a result of how far it has fallen already. 

Investors will need to give these start-ups time, and it will be difficult to predict which will see success until they are closer to actual sales. Until then, they remain speculative investments. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Nikola Corporation Stock Quote
Nikola Corporation
NKLA
$4.72 (-0.84%) $0.04
The Goldman Sachs Group, Inc. Stock Quote
The Goldman Sachs Group, Inc.
GS
$299.23 (0.74%) $2.21
TravelCenters of America Inc. Stock Quote
TravelCenters of America Inc.
TA
$34.99 (1.51%) $0.52
Fisker, Inc. Stock Quote
Fisker, Inc.
FSR
$8.55 (-0.23%) $0.02
Lordstown Motors Corp. Stock Quote
Lordstown Motors Corp.
RIDE
$1.60 (1.27%) $0.02

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.