Nikola Corp: are shares on the road to recovery?

by Alistair Strang from Trends and Targets |

Share on:

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.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, Shareprice, or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation, and is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

get more news and expert articles direct to your inbox
Sign up for a free research account and get the latest news and discussion, and create your own Virtual Portfolio