Nikola, will it survive? 25.01.09Hello, this is Greedy All-Day.
Today, I’ll be analyzing Nikola Corporation, a company once hailed as the “second Tesla.”
Initial Listing and Early Price Action
This chart captures Nikola’s early days after its IPO. During the market frenzy where every stock seemed to skyrocket, Nikola was no exception.
At the height of the COVID-era stock market boom, fueled by retail investor enthusiasm, Nikola saw its price climb to approximately 8 times its IPO price.
But here’s the question: why does this chart not match my memory of Nikola’s original listing price? I distinctly remember its IPO price being closer to $1.
The Answer:
In June 2024, Nikola performed a reverse stock split at a ratio of 1:30. This fundamentally altered its price structure.
Current Status: Down 99% from Its IPO Price
Since its IPO, Nikola’s stock price has plummeted by 99%, leaving it currently valued around $1.
The decline started in January 2022 when the price fell below its original listing price. Since then, the stock has continued to search for a bottom, with no clear indication of where the downward trend might stop.
When Could Nikola Recover?
There are a few key levels and signals to watch for a potential recovery:
Weekly 20 EMA and 60 EMA as Resistance Levels:
Nikola has not seen a golden cross (20 EMA crossing above the 60 EMA) since February 2021.
Even when the price temporarily moved above the 20 EMA, it was consistently rejected by the 60 EMA in the orange boxes.
Key Recovery Signals:
1st Signal: Break above the 60 EMA, which has been a formidable resistance.
2nd Signal: Breakout above $15.66 (green box), a level that served as support for over a year and is likely saturated with resistance due to trapped positions.
3rd Signal: Breakout above the long-term descending resistance trendline, marked by the red box.
Each of these signals would indicate increasing bullish momentum, but until they are achieved, the downtrend remains intact.
Could Nikola Drop Further?
From a purely technical perspective, further downside is possible. However, the current price level is intriguing for speculative investors.
If you believe in Nikola’s potential as a future-leading company, consider this:
Investing $500 now could yield approximately $12,000 if Nikola were to recover to its original IPO price.
That’s a staggering return of 24,230% or 242x your initial investment.
Is It Worth It?
Honestly, I’m skeptical. This is essentially a gamble.
If you’re willing to view the $500 as “money you’re prepared to lose,” it might be worth taking the risk. Otherwise, proceed with extreme caution.
Conclusion
Nikola’s stock resembles the chart of a company that’s essentially dead.
The Downside Risk: There’s no way to know how much further it could fall.
The Upside Potential: If you genuinely believe in the company’s future potential, this could be a lottery-ticket scenario.
My Recommendation: Avoid investing significant amounts into this stock unless you’re fully prepared to lose your investment. While the chart signals extreme risk, speculative plays with small amounts might be worth considering for those who are comfortable with high-risk, high-reward opportunities.
Trade wisely. 🚀
