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Why Nikola (NKLA) is Likely to Disappoint in Q3 Earnings
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Nikola Corporation (NKLA - Free Report) is slated to release third-quarter 2020 results on Nov 9, after the closing bell. This will be the second time that the electric-truck startup will be releasing quarterly numbers as a public company. In the last reported quarter, Nikola incurred loss per share of 16 cents, wider than the Zacks Consensus Estimate of a loss of 14 cents due to high operational expenses. The Zacks Consensus Estimate for third-quarter loss is pegged at 35 cents per share. The loss estimate have widened by 6 cents over the past 30 days. The consensus mark for Nikola’s third-quarter revenues is pegged at $50,000.
Factors at Play
Third-quarter 2020, especially September, has been particularly messy for Nikola. During the three months ended Sep 30, shares of the company have plummeted 69%. In September, Nikola was accused of fraud by Hindenburg Research, with the latter claiming that Nikola misled investors about its electric vehicle (EV) proprietary technology, stating that it was purchased from another company. Following Hindenburg’s allegations, Nikola’s CEO and founder Trevor Milton resigned from the company, which further dampened investors’ faith in the firm and felt like an admission of guilt. Once dubbed as the Tesla (TSLA - Free Report) of trucking, Nikola’s race to e-mobility seems to have been hindered by Hindenburg’s accusations and Trevor’s resignation, which have raised questions about the firm’s legitimacy.
Nikola’s alliance with General Motors (GM - Free Report) , which was anticipated to be closed by September-end, has not been finalized yet. With Nikola being wired in such controversy, investors fear that General Motors may decide against owning a stake in the hydrogen truck maker.
On an encouraging note, Nikola’s partnership with CNH Industrial (CNHI - Free Report) is expected to have been beneficial. Joining forces with CNH Industrial enabled Nikola to accelerate penetration into high-potential European markets and de-risk manufacturing execution. Nonetheless, pessimism surrounding the company has been offsetting the positive developments. Additionally, soaring technology costs and operational expenses (including SG&A and R&D costs) to develop such advanced vehicles are likely to have dented margins during the quarter-to-be-reported.
Earnings Whispers
Our proven model does not predict an earnings beat for Nikola for the to-be-reported quarter, as it does not has the right combination of two key ingredients. A combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP: Nikola has an Earnings ESP of 0.00%.
Zacks Rank: It carries a Zacks Rank of 4 (Sell) currently.
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Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Why Nikola (NKLA) is Likely to Disappoint in Q3 Earnings
Nikola Corporation (NKLA - Free Report) is slated to release third-quarter 2020 results on Nov 9, after the closing bell. This will be the second time that the electric-truck startup will be releasing quarterly numbers as a public company. In the last reported quarter, Nikola incurred loss per share of 16 cents, wider than the Zacks Consensus Estimate of a loss of 14 cents due to high operational expenses. The Zacks Consensus Estimate for third-quarter loss is pegged at 35 cents per share. The loss estimate have widened by 6 cents over the past 30 days. The consensus mark for Nikola’s third-quarter revenues is pegged at $50,000.
Factors at Play
Third-quarter 2020, especially September, has been particularly messy for Nikola. During the three months ended Sep 30, shares of the company have plummeted 69%. In September, Nikola was accused of fraud by Hindenburg Research, with the latter claiming that Nikola misled investors about its electric vehicle (EV) proprietary technology, stating that it was purchased from another company. Following Hindenburg’s allegations, Nikola’s CEO and founder Trevor Milton resigned from the company, which further dampened investors’ faith in the firm and felt like an admission of guilt. Once dubbed as the Tesla (TSLA - Free Report) of trucking, Nikola’s race to e-mobility seems to have been hindered by Hindenburg’s accusations and Trevor’s resignation, which have raised questions about the firm’s legitimacy.
Nikola’s alliance with General Motors (GM - Free Report) , which was anticipated to be closed by September-end, has not been finalized yet. With Nikola being wired in such controversy, investors fear that General Motors may decide against owning a stake in the hydrogen truck maker.
On an encouraging note, Nikola’s partnership with CNH Industrial (CNHI - Free Report) is expected to have been beneficial. Joining forces with CNH Industrial enabled Nikola to accelerate penetration into high-potential European markets and de-risk manufacturing execution. Nonetheless, pessimism surrounding the company has been offsetting the positive developments. Additionally, soaring technology costs and operational expenses (including SG&A and R&D costs) to develop such advanced vehicles are likely to have dented margins during the quarter-to-be-reported.
Earnings Whispers
Our proven model does not predict an earnings beat for Nikola for the to-be-reported quarter, as it does not has the right combination of two key ingredients. A combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP: Nikola has an Earnings ESP of 0.00%.
Zacks Rank: It carries a Zacks Rank of 4 (Sell) currently.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>