The central theses
- Nikola shares fell more than 10% after the company ended its partnership with Republic Services to build zero-emission garbage trucks.
- Wedbush Securities analysts believe Nikola could face a major challenge in regaining investor confidence in the new year.
- The stock tumbled from reaction lows to new lows but was able to see some in the short term Consolidation.
Both companies found that combining various new technologies and design concepts would result in longer than expected development time and unexpected costs. As a result, the program will end along with the previously announced vehicle order.
Nikola remains committed to its battery electric and fuel cell utility vehicle program. It is planned to start delivering its Nikola Tre battery-electric tractor units and to break the ground for its first commercial hydrogen station next year. Dan Ives, an analyst at Wedbush Securities, said the company is facing Kilimanjaro rises to regain credibility on Wall Street in the new year after the news from Republic Services, while maintaining the underperform rating on Nikola shares becomes.
From a technical standpoint, the stock moved towards the end of its price channel after Wednesday’s move. The Relative Strength Index (RSI) moved toward oversold levels at 35.01 during the moving average convergence divergence (MACD) continues to trend lower. These indicators suggest that the stock could see some consolidation in the upcoming sessions, but the general trend remains bearish.
A Price channel is displayed in a graph when the price of a security is bounded between two parallel lines. Depending on the direction of the trend, the channel can be called horizontal, ascending, or descending.
Traders should look for consolidation within the stock’s channel high of $ 28.00 after moving down from previous lows of $ 16.15. When the stock is reversing the trend, traders should look for a trend line resistance at $ 28.00 or previous highs of $ 37.95, although the more likely scenario is a sustained downward move towards previous lows of around $ 13.00.
The bottom line
Nikola shares fell more than 10% after the company stopped working with Republic Services on garbage truck development. The stock is nearing oversold conditions and could see some consolidation before continuing its lower trend.
The author has no position in the stocks mentioned, except through passively managed index funds.