J.P. Morgan sees execution risks for the company associated with a “tarnished brand” after General Motors (GM) – Get Report decided in November to sign a memorandum of understanding with the company that was smaller in scale than investors had previously expected.
However, analyst Paul Coster still expects Nikola’s news cycle “to be less drama-filled and to turn generally positive,” according to TheFly.
Nikola shares were up 7.1% to $14.73 on Monday Morning.
The stock has fallen about 50% since the General Motors news, though Nikola was “prudent” to exit that agreement, according to Coster, in order to preserve cash for the execution of its Class 8 truck push.
GM will supply its hydrotec fuel cell system for Nikola’s Class 7 and 8 semi-trucks, the company said last month, just not under the same terms as had been previously announced.
Last week, Nikola shares dropped after the company announced that its agreement to make between 2,500 to 5,000 refuse trucks for Republic Services has ended.
“The goal of the collaboration was to design and build an industry-first fully integrated refuse truck based on a zero-emissions battery-electric drive platform and body while also integrating multiple new systems into a new state-of-the-art vehicle,” Nikola said in a statement last week.
“In a nutshell, this is a gut punch for investors that were hoping this monster order was a potential paradigm changer for Nikola and reference customer going forward,” Wedbush analyst Daniel Ives said in a note last week.
Ives added, however, that “the company is making some progress on its core initiatives and now at least the slimmed-down GM partnership is done.”