Nikola Corporation (NASDAQ: NKLA) has enjoyed an incredible month. The upstart automaker’s stock price has doubled since it began trading on June 4.
But JPMorgan is already warning investors to slam the brakes . The Wall Street firm has set a stock price target of $45 based on earnings seven years away. With Nikola having closed Monday at $70 , this means the stock is overvalued by about 35%.
The Wall Street firm wrote:
risks are elevated for this pre-revenue company, and the stock looks fully valued here, so we look for a pull-back or incremental positive developments to get more constructive.
But this forecast has hardly prevented the company from continuing to be a millennial favorite.
Though Nikola debuted on the stock market in a reverse merger earlier this month, it is already the second-most popular stock on Robinhood in the past 30 days.
According to Robintrack data, over 148,000 “investors” currently hold the stock on the millennial-friendly brokerage. This is far above the number of new investors other millennial favorites such as Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), and Tesla (NASDAQ: TSLA) have attracted in the last 30 days.
Even more remarkable is that at this level, the stock is below peak investor interest. Less than a week ago, the number of users holding the stock was nearly 153,000. This could suggest profit-taking among some speculators.
Nikola has been ridiculed as a no-revenue company. But in the next few months, the renewable energy carmaker will be working overtime to mature past that image.
On June 29, Nikola will launch pre-orders for its Badger light truck . The company’s founder and executive chairman, Trevor Milton, claims that the truck will compete directly with the Ford F-150 and the Tesla Cybertruck.
https://www.youtube.com/watch?v=xN8tUQoZg_s
And next month, Nikola’s manufacturing facility in Coolidge, Arizona, will break ground . The factory – whose initial construction phase should be completed in 2021- will serve as an assembly plant for battery-powered electric vehicles.
JPMorgan is not alone in offering a bearish take on Nikola.
Just days after Nikola started trading, online investment newsletter Citron Research set a price target of $40 . Citron founder Andrew Left predicted the price target would be hit “in a month.”
Currently, only two analysts are formally covering Nikola: Cowen and JPMorgan. While JPMorgan has issued a neutral rating, Cowen actually recommends buying Nikola .
Cowen set a price target of $79 on the stock last week. That suggests NKLA has about 15% worth of upside.