Nikola down 27% in pre-mkt; Will Tesla reveal battery breakthrough? Nikola down 27% in pre-mkt; Will Tesla reveal battery breakthrough? Nikola down 27% in pre-mkt; Will Tesla reveal battery breakthrough?

Nikola down 27% in pre-mkt; Will Tesla reveal battery breakthrough?

Equities 6 minutes to read
Peter Garnry

Head of Equity Strategy

Summary:  Nikola shares are down 27% as the CEO and co-founder is stepping down adding another confusing layer to the fraud allegations and questions about the company. Tesla will host its annual shareholder meeting tomorrow together with a 'Battery Day' which could potentially reveal technological breakthrough in the cell design and production costs, so this could have an impact for the entire car industry. In this equity research note we are also taking a look at HSBC which is suffering today with banks in general over uncertainty related to the rise in COVID-19 cases in Europe and talks about HSBC being added to China's "Unreliable entity list". Lastly, we talk about the VIX future curve and how it is pricing volatility post the US election.

Ten days ago, we wrote about Nikola when its shares plunged due to harsh fraud allegations by a short seller research report. The CEO and co-founder Trevor Milton promised a fierce defense of him and the company, but it all ended with nothing and the company later admitted to some of the claims in the report. Recently the Justice Department and SEC announced that they had started a probe into Nikola and the allegations against the company. This morning the company announces that Trevor Milton is stepping down and the chairman of the board will take over as interim CEO. The press release is vague and makes it sound like this was a natural leadership transition. The market is not buying it sending the shares down 27% in pre-market trading. It also raises many questions for GM that has just recently invested $2bn in Nikola, but the US carmaker is out saying it will work to close to deal so apparently, they still believe in their due diligence.

Source: Saxo Group

‘Battery Day’ will show Tesla’s lead in battery technology

Tesla will host its annual shareholder meeting tomorrow at 16:30 EST (after the US market close) which will include a “Battery Day”. This has got investors excited to an extent that we have not observed since Steve Jobs’ big product announcements. What can we expect from Tesla? The Japanese media outlet Nikkei reported back in August that Tesla’s partner in battery production at the Nevada Gigafactory has committed in internal documents to invest $100mn in upgrade the manufacturing plant for new cell production. This could mean two things. Either it is an expansion of the existing manufacturing process due to demand or it is a modification upgrade to make it ready for new cell design. We are leaning towards the view that Tesla will most likely reveal a new battery design which will increase energy density, which potentially could unlock a smaller city car with good range, and at a lower price point due to better manufacturing process. In any case, Tesla will likely show the world that it continues to have a lead against the old carmakers in battery technology.

Are banks dying?

Banks are hit hard in today’s trading session with news over the weekend that HSBC could be added to China’s “unreliable entity list” which aims to punish companies that are a security issue for China. The overall sentiment in equities and the economy over the rising COVID-19 cases in Europe are also pulling banking stocks down. The STOXX 600 Banks Index is now only 5% from reaching its absolute low point on record since 1986. We are talking about an industry that continues to be weighed down by regulation, special taxes, and a low and flat yield curve coupled with low loan demand. We remain negative on banks long-term and believe investors should be underweight.

Source: Bloomberg

VIX futures are pricing tail-risk event around US election

Part of the process in writing our Q4 Quarterly Outlook, which this time is a special edition with focus on the US election on 3 November, we looked at various aspects of previous US elections. In the 31 elections in the period 1896-2016 we found that the average daily volatility is around 1% or 16% annualized. This is significantly below the current VIX futures (pricing 30-day forward implied annualized volatility) curve which is above 30 for the months October, November, and December. Only after the elections in 1916, 1932 and 2008 did we observe such high realized volatility.

Source: Bloomberg

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.