Nikola Corp: are shares on the road to recovery?
The U.S. listed company has had a bumpy ride. Our chartist searches for recovery potentials.
17th September 2020 10:16
by Alistair Strang from Trends and Targets
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The U.S. listed company has had a bumpy ride. Our chartist searches for recovery potentials.
Nikola Corp (Nasdaq:NKLA)
It made sense that someone would use Nikola Tesla's forename for a company making electrical goods.
In this case, the product is vehicles, along with a dollop of controversy. A little issue of complaints to the US Justice Department, along with the US Securities and Exchange Commission, has ensured a fairly bumpy ride for the Nikola share price recently.
In addition, gossip among internet chatrooms has been quite delicious, essentially open warfare between true believers and sceptics.
Nikola Corp (NASDAQ:NKLA) announced a partnership with General Motors (NYSE:GM) and already has substantial partnerships with the likes of Bosch.
The true believer camp points out, with a degree of sense, that neither company would proceed with Nikola unless they'd conducted extensive research on the company.
After all, corporate bodies never make mistakes, do they?
From our strictly numbers-based perspective, we have some doubts to the shares’ immediate potential.
Currently trading around $33 (£25.4), it appears weakness next below $30 risks reversal toward an initial $23.5.
If broken, hopefully the share price shall bottom and bounce eventually at the $16.3 level.
Of course, it's unknown whether any bounce will prove capable of emulating Tesla (NASDAQ:TSLA), a company presently trading at $443 dollars whose price once enjoyed languishing at the $7 level.
We'd certainly have grounds for concern should events drive Nikola down below its previous low of $26.7. This effectively takes the share into uncomfortable territory, where our maximum bottom calculation is prefaced by a minus sign!
We have our doubts as to whether further reversals shall take place.
Instead, we'll be more interested should NKLA manage to trade above the $41 mark as this looks capable of triggering recovery to an initial $50 with secondary, if exceeded, at a longer-term (and potentially game changing) $65.
Perhaps worth keeping an eye on as a bunch of folk who missed the Tesla boat are liable to jump on board this one.
Source: Trends and Targets Past performance is not a guide to future performance
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
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