Nikola (NKLA -2.35%) shares surged as much as 14.5% on Tuesday before settling back to a roughly 2% gain as of 1 p.m. ET. That mirrored a similar spike and decline for the electric truck maker to start the week's trading on Monday.
While Nikola recently reported updates, the answer likely lies more with the market in general. There is activity in the electric vehicle (EV) sector due to newly announced tariffs on EV imports from China, and there is renewed trading activity in meme stocks this week.
Volatile EV stocks
Nikola missed revenue expectations in its latest earnings report. But it delivered more hydrogen fuel cell heavy trucks than it had previously projected. Nikola also is focusing on building out infrastructure for its growing fleet of hydrogen trucks. The company is initially focusing on Southern California port areas for its refueling stations. It opened its second station in the area last week. I think there's a valid market for these hydrogen Class 8 trucks, and Nikola is jumping at the opportunity to supply it.
Nikola isn't the only stock in the EV sector with high volatility this week. And while new tariffs just announced for Chinese EV imports are directly affecting other U.S.-based EV manufacturing stocks, that shouldn't be the case for heavy truck maker Nikola.
It's likely that the stock is caught up in the ongoing meme stock trading, with retail traders focusing on stocks with high short interest like Nikola. As of the start of May, Nikola shares had about 18.5% of its float sold short, according to MarketWatch.
Investors would be smart to avoid the noise from those retail traders and focus on their personal positions. I invest for the long-term picture but acknowledge the risk and allocate funds in Nikola accordingly. If other investors have lost faith in Nikola, the stock's jump does offer a chance to sell the risky stock. Every investor needs to decide that for themselves and hold, or sell, the stock accordingly.
