- Nikola reversed from intraday lows and rallied as much as 15% on Wednesday after JPMorgan defended the company following a discussion with Nikola management.
- “The overall message was reassuring: no loss of momentum with existing partners, prospective customers, suppliers and employees,” JPMorgan analyst Paul Coster said in a note on Wednesday.
- Nikola has ping-ponged back and forth over the past week after a short-seller report helped deflate stock gains associated with its $2 billion partnership with General Motors.
- “Never a dull moment with this stock,” Coster said after reiterating its “Overweight” rating.
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“Never a dull moment with this stock.”
That’s what JPMorgan analyst Paul Coster had to say about Nikola in a note on Wednesday following a discussion with the electric vehicle company’s management CFO, Kim Brady.
Over the past week, Nikola stock has been a rollercoaster. Shares jumped more than 50% after it announced a $2 billion parnership with General Motors, but those gains quickly evaporated after short seller Hindenburg Research accused the company of fraud and deception.
From there, both Hindenburg and Nikola contacted the SEC, and it has since been revealed that both the SEC and DOJ is looking into claims made by Hindenburg about Nikola.
On Wednesday, Nikola shares staged a recovery after being down as much as 8% and rallied 15% from its intraday low following the note from JPMorgan.
"The overall message was reassuring: no loss of momentum with existing partners, prospective customers, suppliers and employees," Coster said.
Brady told Coster that some of the issues related to the short-seller report are events that preceded Nikola's SPAC merger earlier this year, and some pre-date the company's founding in 2014.
Additionally, Nikola's manufacturing partners like Bosch have "conducted extensive due diligence on the company," the note said.
Brady told JPMorgan to expect tighter messaging going forward, and did not confirm or deny that regulators are investigating the company. "[Brady] sounded a bit frustrated by how things are being reported in the media at the moment," Coster said.
Finally, in reference to a Nikola director's comment that the company went public too soon, Brady disagreed, saying that Nikola doesn't regret going public when it did because it helped the company enable execution, according to the note.
JPMorgan continues to rate Nikola at "overweight" with a $45 price target, representing potential upside of 37% from Tuesday's close.
Shares of Nikola jumped as much as 15% from its intraday low of $30.25 in Wednesday trades, and are up as much as 5% for the day.
