What happened
Shares of the electric semi maker Nikola (NKLA 3.70%) are falling again today following a decline of nearly 6% yesterday. There wasn't any company-specific news released today, but investors may be following a larger trend of selling technology stocks as bond yields rise.
Nikola's stock is down by 6% as of 10:50 a.m. ET.
So what
Today's sell-off appears to be a continuation of yesterday's drop. Some Treasury yields rose yesterday to highs not seen in two years, which spurred many investors to sell high-growth tech stocks, including Nikola's.
Image source: Nikola.
The two-year yield rose above 1% yesterday -- the first time it had reached that level in nearly two years -- and is still above 1% today. Additionally, the 10-year note climbed to 1.86% yesterday, the highest it's been since January 2020, and is flirting with that level again today.
Investors typically sell high-growth tech stocks when bond yields rise because it means that future profits from these companies will be worth less than they would have been if rates remained lower.
Nikola's share price declined as a result of the sell-off over the past two days, despite the company announcing yesterday a new multiyear deal to use batteries made by Proterra. The company said that the first Proterra-powered Nikola semitrucks will be produced in the fourth quarter of 2022.
Now what
Nikola's stock price has been on a wild ride lately and is down 37% over the past six months. There may be more volatility ahead as investors try to figure out if they want to hold on to riskier tech stocks in 2022 while Treasury yields rise.
Nikola investors will receive some insight into the company next month when the electric semi maker reports its fourth-quarter and full-year results on Feb. 24.
