"Corporate disaster" doesn't even begin to describe it... Through August 2023, this company's stock had plunged roughly 97% from its June 2020 peak. That peak happened just days after the company went public.
Editor's note: Today, we're digging into the Chaikin PowerFeed archives for a lesson...
We originally published this essay on August 8, 2023.
At the time, this company's stock had already lost almost all its value. And yet, it still took another 18 months for some investors' dreams of a rebound to fully disappear.
We've updated the essay with details about what has happened since then. And as you'll see, the Power Gauge never fell into the trap of believing in this company's hype...
The Power Gauge NEVER Rated This Bankrupt Loser 'Bullish'
By Vic Lederman, editorial director, Chaikin Analytics
"Corporate disaster" doesn't even begin to describe it...
Through August 2023, this company's stock had plunged roughly 97% from its June 2020 peak. That peak happened just days after the company went public.
Then, the company's CEO stepped down...
He said it was for a "family health matter."
Sure, that could've been the main reason. But notably, he only held the CEO position for about seven months. And his replacement was the company's fourth CEO in three years.
At the time, in a desperate attempt to raise cash, the company planned to issue new shares. However, it suspended production on the technology that blasted it to fame.
The company laid off workers and did what it could to cut costs. It eliminated 270 jobs in June 2023. And it liquidated an acquisition related to its abandoned technology.
Things didn't get any better in 2024. The company laid off about 15% of its remaining workforce in October of that year. Then, two months later, it held another round of layoffs.
These moves didn't help...
In February of this year, the company filed for bankruptcy protection. Its stock was also delisted from the Nasdaq. (It now trades "over the counter" for just pennies per share.)
Folks, this situation is about as bad as it gets. But as crazy as it might seem...
Investors kept clinging to the dream this company sold until it was far too late.
You see, this company operates in one of the market's most passionately debated segments – electric vehicles ("EVs").
With this company, far too many people couldn't see beyond the hype of EVs. The promise of the technology blinded them from every misstep this corporate disaster made.
But the Power Gauge wasn't fooled...
Through all the twists and turns, our one-of-a-kind system never assigned this company a "bullish" rating. And if you would've followed its lead, you would've stayed far away.
This analyst recently returned from a financial conclave in the desert with some of the wealthiest men in the world (along with JD Vance and the Trump family). Based on the meeting, he believes you now have a short window to be a part of the biggest trade of all time. Here's everything you need to know before August 19.
If you haven't guessed yet, we're talking about electric-truck maker Nikola.
Nikola initially had grand plans to bring heavy-duty electric trucks to the market. And investors loved the idea...
The company soared after it went public – for a few days, at least.
If the Power Gauge was a momentum-only system, Nikola likely would've earned a "bullish" rating at that point. But remember, our system gives us the full picture...
The Power Gauge looks at 20 factors across four different categories – Financials, Earnings, Technicals, and Experts. Because of that, emotional appeal doesn't play into it.
More specifically, the Power Gauge knew something was wrong right away.
You can see what I mean in the following chart. Along with the stock's steep decline, it shows the Power Gauge's ratings from when Nikola went public through August 2023...
As you can see, Nikola only mustered a "neutral" rating when the Power Gauge first graded it in July 2020. And before long, the Power Gauge turned "bearish" on the company.
That doesn't surprise me. After all, the U.S. Securities and Exchange Commission and Department of Justice came knocking at Nikola's door a few months later...
Their investigations into the company started in September 2020. By July 2021, they had indicted the first CEO, Trevor Milton, for lying about "nearly all aspects of Nikola's business."
It might seem obvious that Nikola didn't deserve a "bullish" grade from the Power Gauge.
But look back at the above chart. Each day that Nikola's share price stayed above zero was another day that an unsuspecting investor believed an opportunity still existed.
Heck, even as the company struggled to survive, its stock briefly spiked about 70% in March 2024. After everything, some folks still held out hope that Nikola would rebound.
But as I said, Nikola went bankrupt in February. And its shares are essentially worthless.
Investors who went all in are now broke. You don't want to fall into that trap.
The Power Gauge knows better. In fact, in this case, it knew from the outset.
Good investing,
Vic Lederman
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.5%
11
15
4
S&P 500
+0.78%
138
261
100
Nasdaq
+0.93%
27
59
14
Small Caps
+0.22%
533
1142
411
Bonds
-0.43%
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks have turned somewhat Bullish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Consumer Discretionary
+3.56%
Information Technology
+3.44%
Consumer Staples
+2.89%
Materials
+1.88%
Communication
+1.42%
Financial
+0.88%
Industrials
+0.73%
Utilities
+0.44%
Real Estate
-0.1%
Health Care
-0.74%
Energy
-0.77%
* * * *
Industry Focus
Transportation Services
6
27
11
Over the past 6 months, the Transportation subsector (XTN) has underperformed the S&P 500 by -14.32%. Its Power Bar ratio, which measures future potential, is Weak, with more Bearish than Bullish stocks. It is currently ranked #15 of 21 subsectors and has moved up 2 slots over the past week.
Indicative Stocks
FDX
FedEx Corporation
FIP
FTAI Infrastructure
HTLD
Heartland Express, I
* * * *
Top Movers
Gainers
GILD
+8.28%
ALB
+7.74%
GEN
+7.71%
MNST
+6.4%
MU
+6.28%
Losers
TTD
-38.61%
GDDY
-11.25%
WBD
-8.01%
MCHP
-6.57%
AKAM
-5.66%
* * * *
Earnings Report
Earnings Surprises
RC Ready Capital Corporation
Q2
$-0.14
Missed by $-0.25
SKX Skechers U.S.A., Inc.
Q2
$1.13
Beat by $0.27
SHC Sotera Health Company
Q2
$0.20
Beat by $0.03
* * * *
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