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(Bloomberg) -- It has some competition, but no stock on the auto sector is a better reflection of the equity market’s recent exuberance than Nikola Corp.
The aspiring battery-electric and hydrogen fuel-cell truck maker debuted on the Nasdaq last week following a reverse merger and its stock quickly took off, doubling on Monday and rising another 28% shortly after Tuesday’s open. Trading was halted twice within the first 40 minutes due to volatility, with the shares plunging as much as 22%. They were back up almost 8% as of noon in New York.
The $34 billion market capitalization Nikola had at the intraday peak belies the company’s fundamentals. Nikola is forecasting zero revenue for 2020 and its first $1 billion year in 2023. It doesn’t expect to be fully utilizing an Arizona assembly plant that it hasn’t built yet until 2028.
And yet Ford Motor Co., which is expected to report about $115 billion of revenue for this year, has trailed Nikola by market cap at several points in intraday trading. Many skeptics have questioned for years how much electric-car maker Tesla Inc. should be worth. But with Nikola, investors have taken appraisals of zero-emission vehicle manufacturers named after a celebrated Serbian-American inventor into the stratosphere.
“People are looking at this as the next Tesla, and they’re being stupid. Investors are being ridiculous,” Sam Abuelsamid, a transportation analyst at research firm Guidehouse Insights, said by phone. “While I think the tech absolutely has the potential to be disruptive, I don’t know that Nikola in and of themselves are, necessarily.”
Nikola’s goal is stable growth over time, Trevor Milton, the company’s executive chairman, said in an emailed statement. The 38-year-old said several factors may have spurred Monday’s gain, and cited examples including his tweeted announcement that the company will start taking reservations for a pickup model concept called the Badger.
Starting five years ago, when Milton founded Nikola, through the end of last year, the Phoenix-based company has lost about $188.5 million. It’s planning to start delivering the Tre battery-electric semi truck next year, followed by the Two fuel-cell electric model in 2023.
The Badger model that Milton said may have gotten the market excited on Monday might not actually make it into production. In Nikola’s public-offering filing, the company said it is focused on making Class 8 heavy-duty vehicles and doesn’t expect to build the Badger unless it finds an established manufacturer to partner with.
A spokesperson for the company said Nikola will announce a partner in the near future, without giving more specifics.