The electric vehicle sector continues to be red hot. We all know how well Tesla has done, up 770 per cent in the past year.
Within the sector, the whole recent fiasco with Nikola (NKLA on Nasdaq) has been fascinating. After a quick reverse takeover IPO, the company had a market capitalization of US$35-billion in early June (it is US$7.7 billion today). The story has it all: rampant speculation, a critical short-seller report, a flamboyant founder and an electric truck that was filmed in a video ‘in motion’ but actually was proven to be just rolling down a hill and under no power of its own.
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Sure, the Nikola story makes for great press. But people forget that real people have lost real money on this stock. Perhaps they should have known better. But no one went into the stock with the expectation of losing money. So, what can we learn from this whole mess? Here are five things. Perhaps keep them in mind the next time you want to take a “flyer” on a company.