This is a step-by-step stock review to answer the question, is Nikola Motor Company (NKLA) stock a good buy?
This article will teach you how to use the 4Ms of investing. This will be a detailed walkthrough to show you how the 4Ms work and why they are important. If you are interested, you can log into Tykr to use the 4M Confidence Booster (Powered by OpenAI) which will allow you to complete a 4M Analysis in less than 60 seconds.
What are the 4Ms?
- MOS (Margin of Safety) – The MOS is the math part of investing which includes the Summary, Score, and MOS (Margin of Safety).
- Meaning – The meaning is the business model and how scalable the revenue streams are.
- Moat – The moat is how the business compares to other companies in the same Sector and Industry.
- Management – The management is the track record of the CEO.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
Table of Contents
The following links will direct you to key topics to help answer the question, is Nikola Motor Company (NKLA) stock a good buy?
- Nikola Motor Company History
- MOS
- Meaning
- Moat
- Management
- 4M Score
- Is Nikola Motor Company (NKLA) stock a good buy?
1. Nikola Motor Company History
When investing in stocks, it’s important to know the company’s history. This helps us understand the various revenue streams, if they acquired other companies, how they grew through difficult times, and how they separated themselves from the competition.
- Founding: Nikola Motor Company was founded in 2014 by Trevor Milton, aiming to revolutionize the transportation industry with zero-emissions vehicles.
- Focus on Innovation: Developed hydrogen fuel cell and battery-electric trucks to reduce carbon emissions in the heavy-duty transport sector.
- Prototype Unveiling: Introduced the Nikola One, a hydrogen-electric semi-truck prototype, in 2016, capturing significant industry attention.
- Strategic Partnerships: Formed alliances with companies like Bosch, CNH Industrial, and Iveco to advance vehicle technology and production capabilities.
- IPO Milestone: Went public in June 2020 through a reverse merger with VectoIQ Acquisition Corp, listing on NASDAQ under the ticker symbol “NKLA.”
- Expansion Plans: Announced plans to build a manufacturing facility in Coolidge, Arizona, and develop a hydrogen fueling network across North America.
- Controversies: Faced scrutiny and legal challenges in 2020 over allegations of misleading investors about its technology and capabilities.
- Leadership Changes: Trevor Milton resigned as Executive Chairman in September 2020, and Mark Russell took over as CEO to lead the company forward.
- Ongoing Development: Continues to focus on developing and commercializing zero-emission trucks and sustainable energy solutions for the transport industry.
Nikola Motor Company’s journey highlights innovation, strategic growth, and the challenges of pioneering new technology in the transportation sector.
2. MOS (Margin Of Safety)
When investing in a company, the first step is to look at the financials. Fortunately, Tykr does this for us automatically. The higher the score, the stronger the financials and the safer the investment. The higher the MOS, the higher the potential returns you can make.
- Summary: Overpriced
- Score: 39
- MOS: 1%
To see the most up-to-date Summary, Score, and MOS, please log into Tykr.
3. Meaning
When investing in a company, it’s important to know how a company makes money. A mature business model has multiple streams of revenue which allow the company to weather downturns in the economy.
Here is how Nikola Motor Company makes money:
- Vehicle Sales: Generates revenue by selling hydrogen fuel cell and battery-electric trucks.
- Hydrogen Fuel Stations: Plans to earn money by building and operating hydrogen fueling stations for its vehicles and others.
- Energy Solutions: Offers energy storage and charging solutions, including hydrogen production and storage.
- Partnerships: Forms strategic partnerships and alliances to share technology and infrastructure, generating revenue through collaboration.
- Leasing Programs: Provides leasing options for its trucks, creating a steady income stream from lease payments.
- Service and Maintenance: Offers maintenance and repair services for its vehicles, generating additional revenue.
- Licensing Technology: Licenses its proprietary technology and innovations to other companies, earning licensing fees.
Here are a few of the other companies that Generac Holdings has acquired over the years. This is important because a company will use a “Buy before build” philosophy to go to market faster and add additional streams of revenue. A company with more revenue streams has a more stable business model. Keep in mind, that most companies don’t build new software because it takes too long to go to market and generate revenue.
- Electric Last Mile Solutions
- Wabash National Corporation
4. Moat
When investing in a company, it’s important to understand how a company ranks against other companies in the same sector and industry. Based on the Score, here is how Nikola Motor Company stacks up against other companies.
- PACCAR Inc.(PCAR) – 100
- Manitex International, Inc.(MNTX) – 56
- Astec Industries, Inc.(ASTE) – 50
- Xos, Inc.(XOSWW) – 44
- The Shyft Group, Inc.(SHYF) 39
- Nikola Corporation.(NKLA) – 39
To see the most up-to-date Summary, Score, and MOS and each stock, please log into Tykr.
5. Management
When investing in a company, it’s important to understand who the CEO is, what they have accomplished in the past, and how they have helped this company grow. Good leaders typically have stronger cultures, less turnover, and better returns in the stock market.
- Leadership Transition: Took over as Chairman of Nikola Corporation in March 2021, guiding the company through a period of transition and restructuring.
- Strategic Vision: Focused on refining Nikola’s strategy, emphasizing technology development and market readiness for hydrogen fuel cell and electric trucks.
- Corporate Reorganization: Led efforts to streamline operations, improve efficiency, and strengthen the company’s financial position.
- Investor Relations: Worked to restore investor confidence following controversies and allegations, aiming to stabilize the company’s stock performance.
- Partnership Development: Advanced key partnerships and collaborations to enhance Nikola’s technological capabilities and infrastructure development.
- Production Milestones: Oversaw progress in the development and production of Nikola’s hydrogen and electric vehicles, including the Nikola Tre truck.
- Financial Management: Implemented strategies to improve financial health and manage resources effectively, contributing to the company’s long-term sustainability.
Stephen J. Girsky’s tenure at Nikola Corporation has been marked by strategic leadership, operational improvements, and efforts to rebuild trust and advance the company’s innovative goals.
6. 4M Score
All of our homework on this company leads up to the 4M Score. A lot of investors only look at the numbers. Yes, it’s important to look at the first M (MOS) which is the math part of investing but it’s also important to look past the numbers and also look at the Meaning, Moat, and Management. If all 4Ms pass, we should have high confidence in buying this stock.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
👉 The 4M Score of Nikola Motor Company (NKLA) is 37/100.
To see the most up-to-date 4M Score, please log into Tykr.
7. Is Nikola Motor Company (NKLA) stock a good buy?
Some of the top questions investors can have is Nikola Motor Company (NKLA) stock a good buy or should I buy Nikola Motor Company (NKLA)stock?
Nikola Corporation presents a mixed investment opportunity. As a pioneer in hydrogen fuel cell and electric trucks, Nikola offers significant potential for growth in the green transportation sector. The company’s innovative technology and strategic plans, including building a hydrogen fueling network and developing advanced electric vehicles, position it well for future expansion. However, investors should be cautious due to past controversies and legal challenges surrounding its technology claims and leadership. Additionally, the company faces intense competition in the electric and hydrogen vehicle markets. Overall, Nikola’s commitment to sustainable transportation and its ambitious plans make it an intriguing investment, but potential investors must carefully weigh these opportunities against the associated risks and market uncertainties.
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To truly know if Nikola Motor Company is a good stock to buy or sell, we recommend you log into Tykr. Within seconds you can see the Summary, Score, MOS, and 4M Score.
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