Nikola (NASDAQ: NKLA) stock price has slumped to a record low even as the company continues to make progress. It has plunged by over 42% this year in line with the performance of other similar companies like Tesla, Nio, Lucid Group, and Rivian.
Nikola has made some progress
Nikola’s share price has collapsed as concerns about its significant losses, demand, and balance sheet continued. Its net loss in the last quarter stood at over $147 million after it lost over $169 million in the same quarter in 2023. The company’s annual loss stood at over $966 million in 2023 from $784 million a year earlier.
Nikola has made a lot of progress in the past few months. It has completed repairing the recalled battery electric vehicles (BEV) and started shipping HYLA, its electric trucks. It produced 43 trucks in the first quarter and shipped 40 of them.
Analysts believe that its revenue will continue doing well in the coming years. The average estimate is that Nikola’s revenue will be over $121.5 million this year followed by $421 million a year later. This is strong growth for a company that has been written off for years.
Still, the challenge for Nikola is that its balance sheet is still stretched as it ended the last quarter with $349 million in cash, down from the $466 million it had in the fourth quarter of last year. These funds are, therefore, not enough, meaning that the company could issue another convertible debt or sell more shares to boost its balance sheet.
Nikola stock price chart
Nikola faces huge challenges
Nikola also has more challenges. Most importantly, its trucks are significantly more expensive than diesel ones, making them uneconomical to most fleets. The cost of maintenance and hydrogen fuel is also highly expensive.
Worse, there are not enough hydrogen fueling stations, which explains why Nikola has launched several modular stations in the US and Ontario. Building these stations is highly expensive, especially for a company that has come close to running out of money.
Worse, hydrogen costs more than diesel and other fuels. In a recent report, the Energy Department noted that the average gasoline and diesel prices in the US were about $3.65 and $3.62. In contrast, the average price of hydrogen stood at $32/GGE, making it highly uneconomical.
Therefore, Nikola faces a mountain of challenges ahead, which explains why it needs to raise additional cash by the end of the year. It needs to ramp up production, increase its fueling infrastructure, and hope that hydrogen will become more affordable. However, it is still risky to invest in the company because it seems like a good candidate for being a short squeeze. It is a well-known brand that has a high short interest, meaning that it could be pushed higher dramatically as we saw with GameStop.
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