Overall, 2020 has been a pretty positive year for the electric vehicle industry, all things considered. For one, Tesla (NYSE: TSLA) ended up making history multiple times this year. Not only has Tesla become the largest car company in the world, but the once lampooned EV manufacturer has also now since moved on to the New York Stock Exchange, another historic moment for the industry. Quickly following suit, a number of alternative EV companies have popped onto the scene. However, not all of them have done well in 2020, with many succumbing to their fair share of issues. As it turns out, however, analysts over at JP Morgan have gone on to say that they expect the industry to have a “lot less drama” going into 2021.
JP Morgan analyst Paul Coster wrote in a note on Monday that he expects EV stocks, in general, to do well into 2020 due to rising demand from markets like China. More specifically, however, he singled out Nikola (NASDAQ: NKLA), the embattled electric truck manufacturer that has fallen on hard times, as being one stock that will likely see a major rebound in the upcoming months.
It’s partially a surprising statement, considering just how battered Nikola has been this year. In addition to a scathing short-seller report and the departure of its founder following the resulting scandal, Nikola ended up losing an important deal with waste hauler Republic Services (NYSE: RSG) for almost 5,000 trucks. This is all on top of a drastically scaled back General Motors (NYSE: GM) deal, which was long anticipated by shareholders as being a major turning point for the business. While all of this has damaged the company’s reputation, Coster argues that 2021 could be a major turnaround year for the company once all of the drama settles down.
“Both partnerships were hastily thrown together by the founder, and committed NKLA resources to non-strategic initiatives,” said Coster. “We believe Nikola was prudent to exit these arrangements, preserving cash for execution of the Class 8 truck initiative.”
He also went on to say that Nikola should be on track to show off its upcoming electric truck, the Tre, sometime earlier in 2021. Additionally, the analyst doubled down on his “overweight” rating for Nikola, although he did lower his price target from $40 per share to around $35. That is still more than double the $16.5 Nikola is currently trading for right now.
In response to the news, shares of Nikola shot up by around 19.3%, but still around 80% down from its earlier highs reached back in June. In contrast, most other EV stocks have done incredibly well so far. Tesla’s main rival in China, Nio (NASDAQ: NIO), is up around 1,500% since the start of 2020, making it one of the best-performing stocks in the entire Nasdaq. Besides that, Tesla itself is up around 700% as well this year. While some, more skeptical investors are worried that this EV craze is another bubble, most Wall Street analysts don’t see to agree with this take.
Nikola Company Profile
Nikola Corp is a designer and manufacturer of battery-electric and hydrogen-electric vehicles, electric vehicle drivetrains, vehicle components, energy storage systems, and hydrogen fueling station infrastructure. – Warrior Trading News
