Nikola’s Stock Falters Today due to Lackluster Performance

Nikola’s Stock Falters Today due to Lackluster Performance

Shares of the electric truck maker Nicholas (NASDAQ:NKLA) was on track over the past month, but those gains hit a wall today. The stock has climbed more than 30% since early March, and that includes a big drop today.

After falling 16.5% Tuesday morning, shares of Nikola were still down 4.5% as of 11:25 a.m. ET. Part of this decline is due to declines in many stocks in the electric vehicle (EV) sector. But a new lawsuit involving the company’s former chairman is also likely weighing on the stock today.

Demand for electric vehicles worries

Today’s big electric vehicle news was a major disappointment from the industry leader. You’re here for its first quarter deliveries. Tesla’s deliveries fell 8.5% year-over-year and significantly missed analysts’ average estimates. Tesla competes with Nikola with its electric semi-trucks, but there is little overlap beyond that.

Nikola has also shifted its focus more toward providing hydrogen fuel cell vehicles than its battery-electric heavy-duty trucks. Regardless, Tesla’s failure has investors worried because demand is falling more than expected for electric vehicles in general.

But the news specific to Nikola’s company was a filing yesterday by the Securities and Exchange Commission (SEC) in which it revealed that it was still mired in a legal dispute with its founder and former chairman, Trevor Milton. Milton was convicted last year on federal charges of securities fraud and wire fraud. But he still struggles to gain some control over Nikola.

In its filing, Nikola said that after agreeing to sell its Badger electric utility vehicle and powersports assets, buyer EMBR violated the terms of the deal by partnering with Milton.

Milton continued to try to get board seats with Nikola. Investors don’t want to see Nikola spend the necessary capital on yet another lawsuit. With the demand situation for electric vehicles also in question, investors do not want to face another distraction.

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Howard Smith holds positions at Nikola and Tesla. The Motley Fool ranks and recommends Tesla. The Motley Fool has a disclosure policy.

Why Nikola Stock Ran Out of Gas Today was originally published by The Motley Fool

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