Nikola Reports Earnings Today. Here’s What To Expect.

Nikola, the maker of electric heavy-duty trucks powered by batteries or fuel cells, will report numbers after the close of trading Tuesday in its first quarterly report since becoming a publicly traded entity.

Without significant sales yet, Nikola’s (ticker: NKLA) bottom-line earnings won’t mean much. Still, there will be plenty to talk about including coming battery-powered trucks, hydrogen production costs and new manufacturing facilities.

Here what to watch for when the numbers are released, along with some recent history.
• Wall Street expects a per-share loss of 13 cents from, essentially, no sales. Nikola isn’t selling heavy-duty trucks yet. It’s preparing to launch the battery-powered version of its heavy-duty truck in 2021. Wall Street expects about $114 million in 2021 sales, heavily weighted to the back half of next year.
• The timing of the battery-powered truck launch will be an important discussion topic for investors. Demand will also be important. The Nikola battery-powered heavy-duty truck will hit the market around the same time as the Tesla (TSLA) semi-truck.
• Battery-powered heavy-duty trucks are better suited for shorter- haul applications, like less-than-truckload shipping or moving things around ports. Potential customers and orders for the Nikola product might be discussed.
• The company also recently broke ground on its new Arizona manufacturing facility. This plant will eventually make trucks for the North American market. Before the plant is finished, Nikola will make trucks in Europe with its partner, a division of CNH Industrial (CNHI).
• Timing and cash required to build the plant will be discussed. Timing and cash needed to build out the hydrogen filling infrastructure needed for its fuel-cell vehicles is a bigger deal than even truck manufacturing.
• Nikola wants to drive down hydrogen costs below $3 a kilogram—a level that makes the gas a preferable option to diesel fuel—and says current costs are around $4 a kilogram. Hydrogen retails for about $16 a kilogram in California today. The cost to build a Nikola hydrogen station and the costs to produce the fuel will be a big topic of discussion for investors this quarter and many quarters into the future.
• Nikola’s light-duty truck—called Badger—will also come up. Investors will want to know how many reservations Nikola received for the truck, which will eventually come in battery- and fuel-cell powered versions. Management might defer some of the Badger discussion until Nikola World—an event hosted by the company and scheduled for early December. By then, Nikola should have a truck-making partner that will manufacture Badger for the company. Nikola, at this point, doesn’t have plans to manufacture light- duty pickups.
• Barron’s wrote cautiously about Nikola shares recently, saying we preferred growth-oriented investors to wait. We still feel that way. More tangible evidence of $4 hydrogen production costs would give Barron’s more comfort. The stock would be up on that news, but low hydrogen costs would make Nikola a less risky bet.
• Not everyone is as cautious as Barron’s. Deutsche Bank called Nikola stock a short-term Buy going into the quarter. Analyst Emmanuel Rosner thinks customer details about its battery-powered truck and a partner for hydrogen filling stations would be enough to drive shares higher.
• It’s a bold call. And right or wrong, Nikola stock should move a lot on earnings. Options markets imply a 20% move, up or down, for Nikola stock after the report. Investors should brace for volatility.
• Rosner rates shares the equivalent of Hold, but has a $54 price target for the stock.
• Overall, Nikola only has four Wall Street ratings. Dow Jones Industrial Average components, for comparison, have about 30 analysts on average. Nikola has two Buys and two Hold ratings. The average analyst price target is $56, much higher than where shares are now. The gap, in one respect, represents the amount of uncertainty facing the company right now. There is a lot investors just don’t know about the future of fuel-cell heavy-duty trucks today. Nikola shares have been on a wild ride lately. Gains have pushed the stock up about 250% year to date, better than comparable returns of the Dow and S&P 500. But the stock is also down roughly 60% from its 52-week high reached in June.