Nikola Corporation is currently meeting its short-term objectives, but financial issues persist. Following the release of its third-quarter update, Nikola’s stock fell by over 10%. This decline is not attributed to a failure in achieving immediate goals, as the company has made progress in increasing sales of its hydrogen fuel cell electric trucks. However, particular elements within the report prompted investors to sell Nikola stock, resulting in a 7.1% reduction in share value by 11:50 a.m. ET, despite slight recovery from initial losses.
### High Costs and Mounting Losses
It is widely recognized that Nikola has been operating at a loss, necessitating multiple capital raising events over the past year. This situation is a significant factor behind the 85% drop in the company’s stock throughout 2024. In the most recent quarter, Nikola reported a greater loss than anticipated. The company posted an adjusted loss of $2.75 per share for Q3, exceeding the average estimate of a $2.35 loss as per Reuters. Of notable concern, considering Nikola’s current phase, is the revenue of $25.2 million, which fell short of the $37.2 million expectation.
This revenue shortfall occurred despite Nikola achieving a record sale of 88 hydrogen fuel cell trucks to wholesale partners and reaffirming plans to deliver 300 to 350 units by year’s end. The high costs associated with expanding its hydrogen transportation infrastructure may be contributing to these financial challenges. Nikola has established the HYLA energy brand to support hydrogen fuel needs, reporting nearly a 350% increase in hydrogen dispensing volume since commencing measurement of commercial fueling operations earlier this year. Nonetheless, the company is required to allocate more resources in this direction. Nikola stated, “We are focusing our strategy on providing more support at existing stations to better serve our customers as we scale.”
There appears to be a niche market for hydrogen-fueled heavy trucks. The critical question for investors remains whether Nikola will be able to secure the necessary capital to expand its network sufficiently to achieve positive cash flow.
