Today's dramatic drop in Nikola's stock price.
Nikola's (NKLA) share price plummeted over 10% this morning following the release of their third-quarter earnings report. Despite making strides in the sales of their hydrogen fuel cell electric trucks, investors are dumping the stock.
The report contained certain elements that prompted this sell-off. Although the stock regained some lost ground, it was still down by 7.1% as of 11:50 a.m. ET.
Sky-high expenses and escalating losses
It's no secret that Nikola has been operating at a loss. Their need for multiple funding rounds in the past year has contributed to a significant drop in their stock value, almost 85% in 2024 alone.
The company reported a larger-than-expected loss in the latest quarter. The reported adjusted loss of $2.75 per share exceeded the average forecast of a $2.35 loss, according to Reuters. What might be more concerning is that the revenue, which was expected to hit $37.2 million, actually came in at $25.2 million.
This is despite Nikola having its best quarter yet, selling 88 hydrogen fuel cell trucks to their wholesale partners and reiterating plans to produce 300-350 units by year-end. The problem seems to be the substantial costs involved in expanding their hydrogen transportation infrastructure.
Nikola established HYLA energy to cater to hydrogen fuel needs. The company reported a nearly 350% increase in hydrogen dispensing volume since they began measuring commercial fueling operations earlier this year.
However, this growth has come at a cost. The company announced they are shifting focus to providing more support at existing stations to better serve their customers as they scale up.
There seems to be potential in the market for hydrogen fuel-powered heavy trucks. The question on investors' minds is whether Nikola has enough financial resources to expand its network sufficiently to achieve positive cash flow.
Despite the positive sales figures and expansion plans, investors are questioning Nikola's financial stability due to its high expenses and losses. The company reported a larger-than-expected loss and lower revenue, which may strain their financial resources needed for expanding the hydrogen transportation infrastructure. With the ongoing investments in HYLA energy and focus on supporting existing stations, investors are seeking assurance that Nikola has sufficient funds for growth and achieving profitable operations in the hydrogen market.
In light of these financial concerns, some investors may be rethinking their money allocated to Nikola's stock and considering shifting it towards other companies in the investing landscape.
