Nikola (NKLA -1.15%) initially impressed the bulls when it went public by merging with a special purpose acquisition company (SPAC) on June 3, 2020. The electric-semitruck maker's stock started trading at $37.55 on its first day as a combined company and more than doubled to its all-time high of $79.73 just six trading sessions later.

At its peak, Nikola had an enterprise value of $28.7 billion, even though it hadn't shipped a single vehicle yet. Instead, it was being valued based entirely on the ambitious production targets it set during its pre-merger presentation in March 2020.

Nikola's Tre BEV semitruck.

Image source: Nikola.

At the time, it claimed it could sell 600 battery-powered electric vehicles (BEVs) in 2021, 1,200 BEVs in 2022, and 3,500 BEVs in 2023. It also aimed to ship 2,000 hydrogen-powered fuel cell vehicles (FCEVs) in 2023. But in reality, it didn't deliver a single BEV in 2021 and only delivered 131 BEVs in 2022. It originally planned to deliver 250-300 BEVs this year, but a recent recall of most of those vehicles and the temporary suspension of its new BEV sales could derail that plan.

Nikola also recently brought on its fourth CEO in as many years, approved a plan to double its share count so it could raise fresh cash by selling more shares, and recently filed to sell $325 million in convertible notes. All of those red flags, along with the conviction of its founder and former CEO Trevor Milton for securities and wire fraud last October, drove its stock down to about $1 a share. Does this battered business have a shot at bouncing back over the next 12 months?

The worst-case scenario for Nikola

It's not out of the realm of possibility that Nikola could see its business fail within a year. It ended the first half of 2023 with $227 million in cash and equivalents, but all of that cash came from eleventh-hour cost-cutting and capital-raising tactics during the second quarter.

During Q2, Nikola raised $233 million by selling more shares, liquidating battery pack manufacturing subsidiary Romeo Power, exiting its European joint venture with Iveco, and laying off almost a quarter of its employees. But in the first half of 2023, it still racked up an operating loss of $296 million and only generated $26 million in revenue.

That situation likely worsened in the third quarter after a battery fire forced it to recall most of its vehicles and halt its sales of new BEVs. If Nikola can't restart its BEV business soon, those delays could endanger its plans to roll out its first FCEVs by the end of the year. Missing that target could cause BayoTech, the hydrogen fuel and transport equipment company that placed a five-year order for "up to 50" FCEVs from Nikola earlier this year, to start shopping around for other partners.

Nikola ended the second quarter of 2023 with $615 million in total liabilities, which gave it a debt-to-equity ratio of 1.2. However, its recent convertible notes offering and plans to double its share count could push that ratio even higher in the second half of the year. That's probably why Nikola's insiders sold more than 5 times as many shares as they bought over the past 12 months. If its stock drops below $1 again and stays there for too long, it could get delisted from the Nasdaq. 

The best-case scenario for Nikola

Nikola could struggle to stay solvent over the next 12 months, but its low enterprise value of $1.15 billion might make it a compelling takeover target for Tesla (TSLA -8.78%), which launched its first electric semitruck in late 2022, or traditional semitruck makers like Daimler (DTRU.Y 0.15%).

Nearly a fifth of Nikola's shares were still being shorted as of Aug. 14, so any positive developments -- like the resolution of its battery issues, the rollout of its first FCEVs, new hydrogen deals, or takeover rumors -- could spark a short squeeze.

Nikola's recent convertible notes offering and its decision to double its share count could also buy it more time to launch its FCEVs and prevent its coffers from running dry within the next few quarters. So for now, Nikola doesn't seem as likely to go bankrupt as other troubled SPAC-backed EV makers like Canoo (GOEV 3.96%) and Faraday Future (FFIE -8.73%).

So where will Nikola's stock be in a year?

Unfortunately, it's hard to see how Nikola can overcome its BEV recall, expand its FCEV business, narrow its losses, and raise enough cash at the same time. Therefore, I believe Nikola's shares will either tread water at around $1 or dip into penny stock territory over the next 12 months if it remains on its current path. Some unexpected developments might temporarily drive Nikola's stock higher in this volatile market, but I don't think those potential gains outweigh its fundamental risks.