Erns Watch - Nikola [NKLA], is this the Tesla of Electric Trucks?

Equities 8 minutes to read

Kay Van-Petersen

Global Macro Strategist

Summary:  Earnings Watch aims to highlight some of the key names that are in heavy rotation on investors' & traders' radars.


(These are solely the views & opinions of KVP, & do not constitute any trade or investment recommendations. By the time you synthesize this, things may have changed.)

Tue Erns Watch - Nikola [NKLA], the future Tesla of electric trucks?

Nikola: $36.49 Last, $13.2bn Mkt Cap, +254% YTD,  P/E NM, 2Q Est. -$0.133 EPS, Rev +$100k

  • So this was flagged to KVP by our Global Sales Trading desk, as being a key name that is in heavy rotation for the trading contingent of our clients. Its KVP’s understanding that this will be Nikola’s first report as a public company & there is a JPM research report excellently titled as “No Pressure or Anything”.

  • And at an expected $100K revenue for 2Q (only one analyst breakdown mind you) & $13.3bn mkt cap, yet with an expected $115m in revenue in 2021… KVP had to let out a giggle or two… not to mention, the name is massively up & obviously with currently hardly any revenue (LTM revenue is zero), there is almost certainly only negative earnings – which should naturally also be the case for something that should be fast growing.

  • The basic premise here from the bulls on the stock is that this is the Tesla of the electric truck universe. The green revolution is a force that cannot be stopped & we are only going to see more social impact & sustainable investment themes across the board.

  • The bears will say if this is correctly valued at $13.2bn with est. 2021 revenue of $115m (from 0 to $115m), so c. 115x Price / Revenue. Then Tesla’s market cap should not be $280bn, but closer to $4.8 trn (i.e. 115x times Tesla 2021 Est. Revenue of $42bn) & that without the Elon Premium!

  • Also for context, if you check out BYND: Erns Watch - Beyond Meat, Alternative Protein Theme & Macro Sins which is also set for results after the market close today, its trading at a lower market cap of $8.5bn to Nikola’s $13.2bn – yet BYND is set to make profits this year & end up with revenue of +$464m, not to mention 2022 earnings growth of c. +300% (post an expected +2200% earnings growth for 2020).

  • Worth noting, not a lot of analysts following this name – so take this with a truck-load of salt as we have four data points for consensus skew: Analysts have a c. 50% buys in the name, vs. 50% sells.

  • The 12m consensus price target is c. $56 in-line which is +53% above the last share price of $36.49, with a range of with a range of  $79 to $45, or basically +116% to +23% from the current lvls if the analysts are correct.

  • One has to stretch to 2022, to get any forecasts on earning of +7.3% & +157% top-line growth, after an obviously exponentially ludicrous 2021 top-line growth. Not saying its not achievable, just saying that some serious math – they would ideally need a big corporate partnership.

  • JPM which have an OW on the name (E-2021 price target of 45, c. +23%), expect the focus to be on the customer order book & overall direction of capex, rather than anything too material in regards to actual top-line or bottom-line results – its about magnitude of direction. Worth noting that a company that is clearly in high growth mode, will be going through a lot of cash, so future financing – whilst not necessarily a key focus now – is something to keep on the cards.

  • The name is up c. +254% YTD, with a +241% jump from the Mar lows of $10.35, yet its worth noting at one point this stock hit close to $80 in Jul, so current trough to peak & peak to last has seen a range of +645% to -54%. Clearly this is not for the bingo halls.

  • Link to Nikola’s SEC & Financials

  • Nikola [NKLA] results should be out after the US markets close today

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    Start-End = Gratitude + Integrity + Vision + Tenacity. Process > Outcome. Sizing > Idea.

    This is the way 

    KVP

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