Nikola is Officially a Nonstarter

Nikola and Republic Services have terminated a partnership to jointly develop electric refuse trucks. Nikola said the decision was made after both companies determined the it would “result in longer than expected development time, and unexpected costs.”

On Wednesday morning, Nikola shareholders received troubling news: Waste hauler Republic Services voided its order for 2,500 battery-powered electric trucks. The stock has dwindled significantly in response, leaving investors to question their positions.

That order, disclosed in August, precipitated a 22% jump in Nikola’s stock [$NKLA]. Shares traded at almost $45 after the deal was announced. Today, the stock is trading below $16, after falling another 6% in premarket trading.

“This was the right decision for both companies given the resources and investments required,” said Nikola CEO Mark Russell in the company’s news release. “We support and respect Republic Services’ commitment to achieving environmentally responsible, sustainable solutions for their customers. Nikola remains laser-focused on delivering on our battery-electric and fuel-cell electric commercial truck programs, and the energy infrastructure to support them.”

Republic Services confirmed the deal’s termination and said it remains committed to electrification, citing continued collaborations with Mack Trucks, Peterbilt Motors and a recent investment in California start-up Romeo Systems.

In a Wedbush research report, analyst Dan Ives dubbed the loss a “gut punch for investors that were hoping this monster order was a potential paradigm changer for Nikola and reference customers going forward.”

Nikola, in addition to electric trucks, plans to make heavy duty semi-truck which run on hydrogen fuel cells. Nikola also projects to manufacture the hydrogen gas used in the fuel cells and own the hydrogen filling infrastructure. It’s an audacious goal of a zero-emission transportation future, but one that has some risks related to technology adoption. The risks, along with potential rewards, have sent the stock on a wild roller coaster ride in 2020. Here’s Why Plug Power Has Gone Parabolic Since June

CEO Milton took to Twitter to blast the Bloomberg report, stating that neither the reporter, Ed Ludlow, or any other Bloomberg reporter would be allowed in a Nikola building or event. As for the drivability of the vehicle, Milton said, “I don’t back down and happy to take this fight on. The funny part is, he won’t hurt me. He hurt himself for this hack job of an article. There were no ‘gears and motors missing’ you jackjob. They were sitting on the tables to show the audience.”

Shares top-ticked at almost $94 in June, shortly after Nikola became a publicly traded company by merging with a SPAC. Shares gave up those gains, but then mobilized back to $50 a share from about $36 after Nikola partnered with General Motors [$GM] in early September. And that was only days before a short seller published a negative report alleging that Nikola misled investors, which caused the stock to drop off a cliff.

Who really knows where the stock will go from here, and for what reasons, but the recent headlines aren’t great, but the company has no debt and hundreds of millions of dollars on the balance sheet. The lowest analyst price target on the Street is $15, and it’s from Wedbush Ive’s, who rates it a Sell. QuantumScape is Up 593% Since October; Normal?

That’s one level investors can watch out for, and one that might lead some analysts to become more positive on the stock. The average analyst price target is almost $29 a share, but that pricing is, at least partly, predicated on the Republic deal. Three out of eight analysts, or about 38%, still rate Nikola shares Buy.

Milton also said to the assembled audience that were about to tour the vehicle that “You’re going to see that this is a real truck, not a pusher.” A pusher is a show vehicle that doesn’t have the capability to run and needs to be pushed on stage.