NKLA Stock Price Outlook: How Far Can Nikola Fall?

Stocks to sell

There are plenty of electric vehicle manufacturers out there that you can invest in. Frankly, there’s no compelling reason to choose Nikola (NASDAQ:NKLA) stock in particular.

If Nikola’s CEO has his way, there could be more NKLA stock in circulation this year. Besides, Nikola is facing a delisting threat, so there’s no need to enter a risky trade now.

It seems like everywhere you look, there’s bad news pertaining to Nikola. For instance, the company’s first-quarter 2023 revenue of $11.1 million fell short of Wall Street’s call for $12.9 million. Plus, Nikola’s net earnings loss widened to $169.1 million.

It’s a shame, as Nikola once looked like a promising EV maker. That promise has devolved into disappointment, however, and the safest strategy in 2023 is to steer clear of Nikola stock.

NKLA Stock Faces Imminent Delisting Threat

It’s hard to even list all of Nikola’s problems in one article because there are so many of them. Sometimes, Nikola will take a piece of bad news and try to spin it into good news.

For example, Nikola is throwing in the towel on the European EV market. More precisely, Nikola is selling its stake in the company’s “European manufacturing joint venture” to Iveco Group, in order to focus “on the North American market.”

Nikola couldn’t succeed in Europe, so it’s hoping to at least stay competitive in North America. That’s not even the biggest concern for Nikola’s investors, though.

Alarmingly, the Nasdaq exchange reportedly issued a delisting warning to Nikola recently. That’s because Nikola stock had traded below the minimum bid price of $1 for 30 consecutive days.

There’s no way for Nikola to spin this as a positive event. It will be dreadful for the current investors if NKLA stock gets delisted. Just this concern, by itself, should be enough to dispel any temptation to buy shares of Nikola now.

CEO Practically Begs to Increase Nikola Shares

But, once again, Nikola is working hard to spin something troubling into a positive news item. Here’s a recent example: Nikola is virtually shouting at its shareholders to “VOTE NOW for Proposal 2, which would allow Nikola to increase its authorized number of shares of common stock.”

You can practically feel the desperation in this proposal. Nikola admitted that, if it doesn’t issue these additional shares, the company’s “ability to continue its ongoing operations and objectives, including Nikola’s need for capital, will be out of reach.”

In effect, Nikola is acknowledging that it’s very close to running out of money. Nikola President and CEO Michael Lohscheller even released a video reasoning/pleading with the shareholders to vote in favor of the share-increase measure.

Needless to say (but we’ll say it anyway), this raises dilution concerns. Printing up more shares is a temporary fix for that can reduce the value of each existing share. So, Nikola is resorting to a commonly used tactic in the playbook of failing companies.

NKLA Stock Has Room to Fall Further

It will be disastrous if Nikola gets delisted from the Nasdaq exchange. Meanwhile, increasing the pool of Nikola stock shares is just a quick fix that raises dilution concerns and doesn’t address the automaker’s deeper problems.

It’s not hard to envision NKLA stock losing half of its current value or more by the end of 2023. If that sounds like an exaggeration, just look at how far the stock has already fallen.

The point is, don’t give in to any temptation to invest in Nikola now. There’s no shortage of other businesses, including EV manufacturers, to wager your hard-earned money on.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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