Nikola (NKLA) Gears up To Announce Its Earnings for Q2 2022 as Institutional Traders Continue To Build Up Exposure to the Stock [Updated]

Nikola

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Nikola Corporation (NASDAQ:NKLA), a manufacturer of heavy-duty commercial BEVs and FCEVs, is experiencing a fairly resilient rebound after ending up as one of the worst performing industrial stocks in June, having declined around 33 percent during the month. The stock is up around 22 percent in the past 5 trading days.

Currently, the company’s product portfolio includes the BEV and the FCEV variant of the Nikola TRE truck, as well as the fuel-cell-based Nikola TWO truck. While the BEV variant of Nikola TRE has been available since 2021, its FCEV counterpart is expected to enter production in 2023. Moreover, Nikola TWO is expected to enter production in 2024.

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Recently, Nikola inked an agreement to acquire Romeo Power in an all-stock deal worth $144 million. Under this arrangement, each Romeo Power share will be swapped for 0.1186 shares of Nikola. Moreover, Nikola will also furnish Romeo Power with $35 million in interim funding, including $15 million in senior secured notes and $20 million in battery pack delivery incentives.

As a refresher, Romeo Power currently offers battery packs to three categories of commercial vehicles – medium-duty short-haul trucks, heavy-duty long-haul trucks, and specialty trucks and buses. The deal will offer Nikola substantial vertical integration benefits, with cost savings of up to $350 million by 2026.

As mentioned earlier, Nikola is currently on a rebound, with its CEO Mark Russell recently taking pains to highlight the company’s “strong momentum” on production and deliveries. The demand for Nikola’s trucks remains far greater than their supply.

Looking ahead, Nikola’s shareholders have now approved the increase in the number of authorized shares to 800 million from an earlier cap of 600 million. This increase paves the way for Nikola to issue additional shares in order to fund its operations through 2023.

On the earnings front, analysts expect the company to report $16.58 million in revenue for the second quarter of 2022 and a non-GAAP EPS of -$0.27.

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As far as the sentiment around the stock is concerned, Market Chameleon has tabulated that “large institutional traders are showing a long build-up” in the stock.

Moreover, the put/call ratio for the stock, as tabulated by Market Chameleon, has dropped to 0.6 and is currently below the 52-week average of 0.8.

Nonetheless, the demand for call options on Nikola shares, as measured by the 30-day implied volatility skew between 25-delta puts and calls, is currently firmly lodged in the bearish territory, indicating that a complete reversal in the ongoing bearish regime has not occurred as yet.

We will update this post with the company's earnings when they are released in the next few minutes.

Update: Nikola Announces Upbeat Q2 2022 Earnings

For the three months that ended on the 30th of June 2022, the company has revealed $18.13 million in revenue against expectations of $16.58 million.

The company also remains on track to deliver between 300 and 500 Nikola TRE BEV trucks. In Q2 alone, 50 TRE BEV trucks were produced, of which 48 were delivered. Moreover, the testing of the TRE FCEV truck has begun.

Nikola expects to increase the output of its Coolidge, Arizona, facility to 5 units per shift by November 2022, with Phase 2 expansion expected to be completed by Q1 2023.

Finally, the company has reported -$0.25 in non-GAAP EPS, nominally beating consensus expectations.

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