Nikola (NKLA) was down 5.6% in Friday’s after-hours trading, after the electric vehicle company announced a recall of its battery-powered commercial trucks. Around 209 trucks are being recalled due to a malfunction that causes their batteries to overheat. The battery trouble became apparent in June, when a fire ignited in a truck parked at the company’s headquarters.
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Unfortunately for Nikola, the recall comprises virtually all of the trucks that have been shipped to customers. On the upside, it does not affect hydrogen fuel cell-powered trucks, which have become a mainstay of NKLA’s business. However, the company has not seen great demand for its fuel cell-powered vehicles. Additionally, changes at the top due to the CEO’s sudden departure had already caused investors to flee the stock.
What Do Analysts Say about NKLA Stock?
Last week, even before the recall was announced, five-star analyst Daniel Ives of Wedbush reiterated a Hold rating on NKLA stock, citing lowered guidance on production as a concern. At the same time, the analyst said that Nikola has been effectively reducing its cash burn rate.
D.A. Davidson analyst Michael Shlisky also reiterated a Hold last week, bringing the analyst consensus rating on NKLA to a Hold with a $2.75 price target, implying a 41% upside.
Year-to-date, NKLA stock is down 12.16%.
