Nikola (NKLA 8.91%) has taken investors on a wild ride over the past two years. The electric truck maker went public by merging with a special purpose acquisition company (SPAC) run by General Motors' (GM 0.74%) former vice-chairman Steve Girsky on June 3, 2020, and the combined company's shares opened at $37.55 the following day.

Less than a week later, Nikola's stock surged to an all-time high of $79.73, which valued the company at a whopping $28.8 billion -- even though it hadn't delivered a single truck yet. Instead, it traded on its ambitious target of delivering 7,000 BEV (battery-powered) and 5,000 FCEV (hydrogen-powered fuel cell) trucks annually by 2024. It also planned to operate a network of 24 hydrogen charging stations that year. Based on those bullish estimates, Nikola management claimed the company's revenue could hit $3.2 billion in 2024.

Nikola's BEV truck.

Image source: Nikola.

But just three months after its public debut, the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) launched securities fraud investigations into Nikola and its founder and then-CEO Trevor Milton. Milton stepped down as its CEO and was indicted on three counts of fraud last July. General Motors, which previously took an 11% stake in Nikola and had planned to co-produce its consumer-facing Badger pickup truck, also sold its shares and abandoned the project in November 2020.

All that bad news caused Nikola's stock to collapse to about $6 a share today, which gives it a much lower market cap of $2.5 billion. Could Nikola still be a potential turnaround play for investors who can stomach the volatility? Or will it be towed off to the junkyard for failed SPAC-backed EV makers?

Is Nikola still producing new vehicles?

After the SEC and DOJ investigations started, Nikola's president Mark Russell succeeded Milton as its CEO and distanced the company from its embattled founder. Last December, the company reached a settlement with the SEC and agreed to pay $125 million in five installments over two years. That same month, it finally shipped its first two Tre BEVs to TTSI in California for a three-month pilot program.

That's a far cry from the 600 BEV shipments Nikola claimed it could achieve in 2021 during its pre-merger presentation, but it also indicates the company isn't in the same boat as sinking SPAC-backed EV makers like Canoo (GOEV -0.52%), which still hasn't shipped a single vehicle yet.

In terms of production, Nikola has already completed the Phase 1 construction of its plant in Coolidge, Arizona, which gives it an annual production capacity of 2,500 trucks. It plans to complete Phase 2, which will boost its annual capacity to 20,000 trucks in two separate shifts, by the first quarter of 2023. It also completed a plant in Ulm, Germany, which has an annual production capacity of 2,000 trucks and is expandable to 10,000 trucks per year. It expects its German plant to manufacture and deliver 25 trucks in 2022. The company also achieved its first commercial shipment of 11 vehicles in April.

During its first-quarter report in May, Nikola predicted it would deliver 300 to 500 BEV trucks in 2022, continue conducting tests and pilot programs for its FCEV trucks, and start building its first hydrogen production hub in Arizona. It's also received 510 BEV truck orders so far.

Is Nikola's stock undervalued?

Based on those shipment targets -- and a price tag of $120,000 to $150,000 per BEV truck plus service revenue -- analysts believe Nikola could generate up to $115 million in revenue this year.

However, they also expect it to rack up a net loss of $704 million as it expands -- which is a lot of red ink for a company that only held $360 million in cash and equivalents at the end of March. It also has access to another $409 million through an equity line from Tumim Stone Capital.

Nikola raised $200 million with a convertible note offering in May, and it's attempting to launch another secondary share offering, which would raise about $1.5 billion but increase its outstanding shares from 600 million to 800 million.

However, that proposal was narrowly struck down at a recent shareholder meeting and remains in limbo. Milton, who still holds a 20% stake in Nikola, reportedly voted against the offering. If Nikola can't get the offering approved, it will likely need to take on more debt. It ended last quarter with a manageable debt-to-equity ratio of 0.5, but raising fresh cash at favorable rates in this market could be challenging.

Nikola is approaching penny stock territory, but it still isn't cheap at 22 times this year's sales. Its stock will get even pricier if it increases its float.

It's still too speculative to buy

Nikola's business seems to be stabilizing, but its stock is still too expensive relative to its near-term growth. Investors looking for a speculative EV stock should take a closer look at Rivian (RIVN -12.05%), which has already manufactured thousands of vehicles but trades at 16 times this year's sales, instead of betting on Nikola's shaky turnaround.