On Monday, Nikola Corp . (NASDAQ:NKLA) experienced a revision in its stock outlook by DA Davidson, with a price target decrease to $10 from the previous $12 while the firm maintained a Neutral rating on the stock. The adjustment followed Nikola's second quarter earnings for 2024, where the company reported increased deliveries of its fuel cell electric vehicles (FCEVs), totaling 72 for the quarter. Despite the higher delivery numbers, DA Davidson expressed continued concerns regarding the company's cash burn, which amounted to $90 million in the second quarter, leaving Nikola with $256 million in cash reserves.
The company's performance in the second quarter has led to a maintained full-year outlook, with expectations that delivery numbers could reach the higher end of the projected range of 300 to 350 units. This is based on observed strong demand trends and interest from national fleets in the FCEV, coupled with ongoing openings of hydrogen fueling stations. These developments suggest a positive response to Nikola's offerings in the market.
However, the financial health of Nikola remains a point of caution for DA Davidson, as the firm points to the significant cash burn rate as a potential risk. The analyst from DA Davidson indicated that while the progress in vehicle deliveries and infrastructure is acknowledged, the company's financial trajectory is still a concern, especially considering the upcoming 2027 EPA emissions standards and their potential impact.
In summary, while Nikola has demonstrated progress in terms of product delivery and market interest, the company's financial situation, particularly its rate of cash consumption, remains a significant factor in DA Davidson's assessment. The firm has chosen to maintain a neutral stance on the stock, adopting a watchful approach as Nikola navigates the challenges ahead.
In other recent news, Nikola Corporation, a leader in zero-emission truck technology, has reported significant progress in its hydrogen fuel cell truck sales and fueling infrastructure. In its second quarter 2024 earnings call, the company announced it had exceeded expectations by wholesaling 72 hydrogen fuel cell electric trucks, an 80% increase from the previous quarter. Additionally, Nikola reported a record refueling day at its Ontario station, dispensing over 850 kilograms of hydrogen and refueling 28 vehicles.
The company's revenue for the quarter was $31.3 million, despite a gross loss of $54.7 million. However, Nikola maintains its delivery guidance for the fiscal year and remains committed to expanding the hydrogen fuel infrastructure. These developments reflect Nikola's ongoing efforts to attract larger customers and partners, while simultaneously working on cost reduction and improving its cash burn.
Looking forward, Nikola plans to provide a reliable hydrogen fueling network in North America by the end of the year. The company is also exploring partnerships in areas such as hydrogen supply, sourcing, and component manufacturing, especially in Asia. Despite operating at a loss, Nikola's strategic partnerships and commitment to innovation suggest a continued momentum in the zero-emission trucking industry.
InvestingPro Insights
As Nikola Corp. (NASDAQ:NKLA) navigates through its financial and operational milestones, real-time data from InvestingPro provides additional context to the company's current market standing. With a market capitalization of $401.24 million, Nikola's stock trades with high price volatility, which could be a consideration for risk-averse investors. Analysts have revised their earnings upwards for the upcoming period, reflecting some optimism in the company's ability to meet market expectations.
Despite delivering more fuel cell electric vehicles this quarter, Nikola is quickly burning through cash, with a gross profit margin at a staggering negative 567.8% for the last twelve months as of Q2 2024. This underscores the concerns raised by DA Davidson regarding the company's cash burn rate. Additionally, the stock has experienced a significant return over the last week, but it has fared poorly over the last month, with a price total return of -15.43%. These figures highlight the stock's short-term gains amidst a broader negative trend.
For readers interested in a deeper analysis, there are 20 additional InvestingPro Tips available, which include insights on Nikola's valuation, profitability, and stock price performance. These tips can be accessed for further guidance on the stock's future trajectory. For a comprehensive understanding of Nikola's financial health and market position, consider exploring the full range of insights at InvestingPro.
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