NKLA Dark Pool Activity

NKLA Stock Analysis

Where do we begin with Nikola Motors (NASDAQ:NKLA)? The stock went public via a SPAC merger in June of 2020, at a valuation near $12 billion. Nikola debuted on Wall Street at a great time, as it capitalized on the market hysteria surrounding anything to do with electric vehicles. So how did this promising electric truck maker go from Wall Street darling to Wall Street punchline in a matter of three months? Let’s take a look!

Nikola hit the ground running after its IPO and became a stock that retail investors rallied around, with many believing Nikola would change the delivery industry forever. Shortly after its merger, Nikola hit an all-time high price of $93.99 per share on June 9th, giving the company a $20 billion market cap. Remember, the company had never made any revenues and hadn’t even made a real vehicle yet. Everything was just prototypes and drawings. 

The stock pulled back from its high water levels and CEO Trevor Milton felt the pressure to deliver. Nikola was labeled a Tesla rival, which looking back now is almost laughable. The stock was steadily declining, and in September of 2020, things got weird. 
Noted short seller Hindenburg Research released a scathing report on Nikola, calling it an intricate fraud. The report claimed that Milton deceived investors and partners into believing in Nikola’s proprietary technology, and even accused the company of towing one of its prototypes to the top of a hill and filming the truck rolling back down. Milton stepped down as CEO of Nikola, and the stock went into free fall, finally settling in the low teens. I’m not sure what is crazier: that Nikola was worth $20 billion at one time or that it’s still worth $5.5 billion today!

Nikola Trading Activity

Nikola found some support from Redditors who believed that the stock had fallen too far. At this point, I’m not sure what attracts these investors more: the fundamental business behind the company or the short float. Perhaps rightfully so, Nikola’s current short float is over 30%, which is higher than the institutional ownership of 20%. The insider ownership number for Nikola is high, too high. Over 55% of the shares are owned by those inside the company, and while insider ownership is good, that number is just way too high.

The news for Nikola has actually improved as of late, as new CEO Mark Russell has changed the direction of the company. Nikola announced it was adding 51 dealership locations across 9 states where it’s Nikola Two and Nikola Tre semi trucks will be sold from. Currently shares of Nikola are still trading below both the 50-day and 200-day moving averages, which are key indicators of sentiment. The RSI is weak, hitting the mid 30s this week, and the MACD appears to be curling back downwards, signalling that market sentiment is still bearish.

Dark Pool Charts $NKLA

With a stock like Nikola, you have to keep up on the dark pool activity to get the whole picture. For a stock that has been sold off and beaten down, it may almost be time for institutions to scoop in at these rock bottom prices. When they do, it could signal a catalyst is upcoming, such as the new sales locations that Nikola recently opened. 

All that being said, you can now see why using specific dark pool data can be invaluable to your trading or investing process. If you are a long term investor, watching the activity on dark pool charts can alert you to opportunities to buy and sell. However, it should be only one factor in your decision making process.

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