Things played out exactly as predicted. Massive dilution of the stock, and massive loss of value to stock holders, currently Nikola Motors has a market cap under one month of expenses. Bankruptcy is looming around the corner. Market is healing, this scam is almost over.
In nine months stock is down 98%, hope by shorting the stock, CFD, or options you made a nice profit. To avoid any liquidity or legal shenanigans I recommend exiting the trade now, before it goes belly up.
For all these years in the stock market, this one felt almost like a helicopter trowing bags of money down to whoever wanted to take it. It would be extremely hard for Nikola Motors to succeed at IPO, but it would take a fucking miracle for this shady company to turn around and go anywhere in the last months.
It actually surprises me how long the business survived, almost 5 years since IPO.
It makes sense to make a quick post mortem analysis of the trade. Starting with analysts ratings and price targets of stocks:
Please be very careful taking any advise from analysts, in my opinion best is to ignore them at all. Invest in businesses that you understand, do your own research and due diligence.
The media and the legal pump and dump. This will happen again, again, and again. It’s a pattern, and the script is more or less like this:
1 – An expanding hyped up bubbling sector, let it be the flower bulbs, railroads, dotcoms, EVs, DNA, crypto, AI or something else.
2 – Some shady company backed up by “a team of great investors”, business partners, banks, brokers, the media and marketing hype machine (including the so called financial analysts).
3 – Company is sold to the market as a future player or leader of the hyped sector. Media is buzzing.
4 – General public gets in the hype train, stock runs wild, big money out.
5 – Company tries to show some work, but the real focus will be press releases, announcements, validating deals (partnerships and so on). All this will avoid SEC and legal complications for big money.
6- Company burns trough cash without showing practical results. Concerning signs about the company may surface but will be promptly dismissed by the bag holders. It’s just another setback.
7 – There can be capital raises and offerings, but eventually company gets out of money, mostly retail investors are left holding the worthless bag.
Meanwhile big money, top executives, directors, media, marketing managers, analysts, bankers and brokers are far far away enjoying their hard earned scammed money.
Yet again, #1 rule of the game, do your own research.