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Nikola surged again Thursday. Is this hot stock worth buying now?


Nikola (NASDAQ:NKLA) The stock posted another sharp gain in Thursday’s trading. Shares of the electric vehicle (EV) company ended the day up 14%.

Nikola shares began rising last week after the company celebrated the opening of Southern California’s first Hyla hydrogen refueling station. The stock’s gains got an extra boost after Wednesday’s announcement that the Canadian province of Alberta will get its first commercial hydrogen refueling station. The station is provided by Nikola’s Hyla brand in partnership with Suncor, County of Leduc, Alberta Emissions Reduction and Blackjack Roadhouse.

With Nikola stock heavily shorted, positive developments in the hydrogenation space also appear to be triggering short squeezeMany investors short-sell stocks by borrowing shares, hoping to buy back the shares at a lower price and earn the difference as profit.

Is now the time to buy Nikola stock?

Due to the sudden surge in stock prices, short sellers are now apparently buying back shares quickly to cover their positions and avoid potentially huge losses. This buying behavior creates more bullish momentum for the stock. Nikola shares are currently up about 57% over the past five trading days.

While Nikola stock is likely to continue moving higher in the short term, it’s important to remember that most short squeezes tend to be fairly short-lived. Shares in the electric vehicle specialist have risen sharply, and concerns remain over the longer-term outlook for the business, despite recent signs of progress at its petrol station business.

Nikola’s fuel cell electric truck losses remain the company’s main source of revenue and continue to be sold in large numbers. Last year, the business recorded a net loss of approximately $966.3 million on sales of approximately $35.8 million.

As the business burns cash quickly, Nikola needs to obtain new funds by selling new shares or raising debt. The company has a poor track record of executing and delivering on its promises, and its poor business momentum and financials suggest the stock is not suitable as a long-term investment.

Should you invest $1,000 in Nikola right now?

Before you buy Nikola stock, consider the following factors:

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Keith Noonan Has no position in any of the stocks mentioned. The Motley Fool has no position in any stocks mentioned. Motley Fool has disclosure policy.

Nikola surged again Thursday. Is this hot stock worth buying now? Originally published by The Motley Fool



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