Nikola Corp (NASDAQ:NKLA) Stock Doubles In a Month: has The Bottom Reached?

In a period of one month, the electric truck manufacturer Nikola Corp (NASDAQ:NKLA) saw its stock go on a major rally and during that spell, it ended up with gains of as much as 100% amidst heavy interest. However, soon after the stock delivered that performance, its performance turned into a bit of a mixed bag and it went through intermediate falls earlier this week.

Hence, it may be a good time to take a closer look at what may be going on with Tesla. It appears that after the heavy interest in the stock in the past month, investors are cooling off. The fall could be related to the fact that last weekend it emerged that one of its trucks had caught fire.

On July 23 the company announced that a truck had caught fire at its headquarters in Phoenix. The company revealed that the truck had been previously damaged. There were no injuries to anyone and the fire was rapidly brought under control. In June Nikola had reported that many of its trucks at the Phoenix headquarters had been damaged in a fire.

At the time the company had speculated that the fire may have been a case of arson but an investigation from the fire department could not find evidence to support such a claim following an investigation. Experts suggest that it is never good news when the vehicles of a vehicle manufacturer start catching fire. However, it can turn out to be particularly damaging when the company is trying to emerge as the alternative to the major players in its industry.

At the end of June, the company had reported that the vehicles had caught fire but the fact that the vehicles caught fire again may have caused investors to rethink their positions about the products. The timing of the setback was particularly damaging for the company since it came at a time when Nikola had made significant progress.

While it may be damaging, it is not the end of the world for the company and a higher level of transparency from the management may help. If the company comes forward with any manufacturing defect which may have caused the fires then in the eyes of the investors Nikola would be seen as a forthcoming company that seeks to take care of the problems quickly and effectively. These are some qualities that investors generally appreciate when they invest in a growth stock.

Yesterday, the Nikola stock was on an upward trend yet again and clocked gains of 10% amidst fresh interest. At this point, it is important to figure out if Nikola could grow at a higher rate than Tesla, the industry leader. Analysts believe its revenues to go from only $51 million in 2022 to $864 million in 2025 and that would work out to CAGR of as much as 157%.

That would place the company in a position in which Tesla was around a decade ago. From 2012 to 2012, Tesla grew at 387%. However, Tesla is projected to generate revenues of $100.3 billion this year. While Nikola can grow at a higher rate, it is unlikely it would ever become more valuable than Tesla.