Starting with the obvious – NKLA is a fraud and is absolutely nothing more than a smoke and mirrors show. Let’s take a look at the indictment on Trevor Milton:
” 1) Federal prosecutors accused Milton, who resigned as chairman in September, of making deceptive and false claims regarding “nearly all aspects of the business,”
2) Prosecutors say that when Milton unveiled their tractor trailer truck it had to be plugged into the wall, the headlamps were activated by remote by a staffer, and air had to be pumped in because there was a slow leak in the air lines of the truck;
3) Prosecutors do say part of Milton’s conduct was video of the Nikola truck in the Super Bowl ad was not in fact of a working truck but was towed to the top of a hill. Breaks were released and it rolled downhill.
4) Prosecutors say in February of 2020 Milton made statements that his pickup truck — called the Badger — would be built with its own parts and frames. Meanwhile they were using Ford F-150 trucks for chassis and frames on their prototypes “
(From Tom Winters NBC news on Twitter)
So, not only NKLA used parts from other automakers but couldn’t even make a working prototype. It had to be plugged to a fucking wall. Who’s backing them now and partner after this? EV competitive landscape just keeps increasing and there isn’t shortage of startups to partner.
So with no revenue, no product, a fraud indictment of the founder, I’m afraid NKLA is nothing more but what’s on the balance sheet:
$760M of cash
$120M of PPE
minus $70M of liabilities
Total $810M as of Q1
During Q2 the company raised $300M from Tumin, invested $50M in an hydrogen biz and assuming the same cash burn rate of $85M, total cash stands at ~$1billion.
Cash burn is $240M for the last twelves months – which is not a lot – but that doesn’t include stock based compensation of $200M. So either NKLA does another capital raise – and it will be dillutive as hell in the current environment – or they have some sort of breakthrough – which would actually be a first. Current market cap is $5bn.
Technicals also point towards a massive decrease in share price:
One thing NKLA can do is lower lows
A close-up: double top (lower high) at $19.54 marking the new downtrend. Currently below all MA and RSI with room to go deeper.
What about insider buying? Certainly insiders know what’s going on:
Nice!
This seems like a great set-up to short. I’m sure I’m not gonna be the only one seeing it.
This article was written by u/itsonlyfiat.
