Nikola (NKLA) stock remained sluggish yesterday, even after the company reported record Q3 deliveries. Since then, interest from short sellers in NKLA stock has surged. The electric truck producer has spent the past year on a steady downward trajectory, dropping from over $30 per share to less than $4. Despite finally reporting positive news, shares still fell, and short sellers have sensed an opportunity.
What’s Happening with Nikola Stock Today?
Nikola trended downward yesterday, falling 7% in after-hours trading. While there was a slight uptick in pre-market trading this morning, NKLA stock has struggled significantly recently, even with company-specific catalysts. Shares have fallen 50% in the past three months and remain unable to rise above the penny stock level.
Meanwhile, short sellers are closing in on the troubled EV stock. Data from Fintel shows that short interest accounts for over 31% of the stock’s float. As of this writing, no Nikola shares are available to short, indicating that bearish investors are increasing their bets. Short sellers have just 2.3 days to cover their positions, suggesting that short interest in NKLA is rising quickly.
Sometimes, short sellers may avoid shorting a penny stock, as the low share price can limit profit margins. However, with Nikola trading at just under $4 per share, it presents an enticing opportunity for investors looking to profit before it declines further. Given that NKLA is currently down 85% year-to-date, a turnaround seems unlikely.
Is it Time to Sell Nikola Stock?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on NKLA stock based on one Buy, two Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Even after shares declined 88% over the past year, the average NKLA price target of $11 per share implies 188% upside potential.
See more NKLA stock analyst ratings
That said, multiple analysts have expressed more measured takes on Nikola following the Q3 earnings report. Ben Kallo of Robert W. Baird reduced his price target from $14 to $10, while Jeff Osbourne of TD Cowen assigned a Hold rating. As TipRanks’ Austin Angelo reports, “One of the primary reasons is the higher-than-expected cash burn in the third quarter of 2024, which leaves the company with a limited operational runway of 5 to 6 months.”
