What happened
Some electric vehicle (EV) sector stocks are having a good week, and some are having an exceptional one. The stocks of solid-state battery maker QuantumScape (QS 5.69%) and Chinese EV maker Nio (NIO 8.72%) have jumped by about 25% and 26%, respectively, since last Friday's close. But shares of electric truckmaker Nikola (NKLA 7.23%) have soared over 100% as of Thursday afternoon, according to data provided by S&P Global Market Intelligence.
So what
Nikola's parabolic move has come for several reasons. Last week, the company adjourned its annual shareholder meeting, with plans to reconvene it on July 6. The company needs more shareholders to vote on a proposal to allow Nikola to increase the authorized number of shares in order to raise future capital. Though 77% of shares voted through June 6 were in favor of the proposal, it will require more affirmative votes to pass. That seems likely to happen based on the votes tallied so far, and that capital will be critical for Nikola to continue to grow its sales and business.
The stock's momentum has also likely been boosted by other factors. With this week's macroeconomic data showing lower inflation, investors have been boosting shares of growth and technology stocks. The tech-heavy Nasdaq Composite index itself has jumped about 3.5% this week. The cost of raising needed future capital will come down if interest rates begin to ease in the wake of lowering inflation.
Additionally, almost 22% of Nikola's outstanding shares were sold short as of the end of May. That likely has led to some investors covering short positions, resulting in a short squeeze. QuantumScape also has similar short interest, which could explain some of its stock's jump this week.
QuantumScape shares also got a boost after a technical update from Toyota revealed that the global automaker plans to move its next-generation batteries over to solid-state technology -- exactly what QuantumScape is on track to commercialize over the next several years. Toyota hopes for commercial application of its battery in 2027 or 2028. If those timelines play out, QuantumScape would be the first of the two companies to market.
Nio's stock move this week has also likely been helped by the previously mentioned macroeconomic trends. But the Chinese EV maker also announced a price cut this week that will lower prices across its lineup by the equivalent of about $4,200. That represents a drop of between about 6% and 9% for its lineup of EVs, and investors hope that could boost sales.
Now what
While short squeezes and positive macroeconomic news have helped these stocks this week, investors still need to focus on the underlying businesses. Nikola and Nio are not yet making money, and QuantumScape has yet to even generate revenue.
Each remains a speculative investment, and these recent stock moves shouldn't be viewed as reflecting any major fundamental change in the businesses. However, each company is making progress to improve its future prospects, and some investors are happy to speculate that they will succeed.
