Nikola Share Price: What Drives Nikola’s Stock Price?

Understanding what moves Nikola's stock price is crucial for traders following the electric and hydrogen-powered truck market.

This guide covers the various factors that influence the value of Nikola Corporation (NKLA) shares, from supply and demand dynamics to the effects of strategic partnerships and market sentiment. It will also explore how clean energy market trends and regulatory policies might impact Nikola’s financial performance.

For those seeking to understand the forces affecting the NKLA stock price, this article offers a comprehensive look at the elements at play. Let’s dive in:

What Is Nikola Corporation?

Nikola Corporation, established in 2014, is an American manufacturer of heavy-duty commercial vehicles focusing on zero-emission transportation solutions. The company specialises in both battery electric vehicles (BEVs) and hydrogen fuel cell electric vehicles (FCEVs), primarily targeting the trucking sector. Nikola's lineup includes models such as the Nikola One, Nikola Two, and Nikola Tre, which aim to introduce electric and hydrogen fuel cell technology to long-haul and regional transportation.

Beyond commercial trucks, Nikola has plans to expand into the market for hydrogen-electric sports vehicles, aiming to bring its expertise in clean energy to a broader audience. Additionally, the company is developing a network of hydrogen fueling stations and BEV charging solutions to support its vehicles.

The company’s stock is publicly traded under the ticker symbol NKLA on the NASDAQ stock exchange. Traders can monitor Nikola's progress in developing its vehicles and infrastructure, as these factors may significantly influence the stock's price movements.

Nikola Stock Price Changes: A Historical Summary

Nikola Corporation went public on the Nasdaq on June 4, 2020, at an initial share price of US $37.55. Soon after, on June 9, 2020, the company’s stock reached its all-time high of $79.73.

However, the price of NKLA has experienced significant fluctuations since then. For instance, on March 31, 2024, the stock price was $1.10. By June 14, 2024, the closing price for Nikola stock had decreased further to $0.48.

While a stock’s historical performance does not predict future outcomes, the observed price changes in Nikola’s stock may have been influenced by several factors, such as market sentiment, economic conditions, and the company's earnings and revenue growth, among others.

It’s important to note that the stock market is impacted by a complex mix of elements, making it difficult to pinpoint specific causes for price changes without a thorough analysis.

The Role of Supply and Demand in NKLA Price Movements

The role of supply and demand in determining Nikola's stock price is fundamentally tied to the basic economic principle that when the availability of a stock is limited and demand is high, its price tends to increase. Conversely, if there is a large supply of shares and the demand is low, the stock price typically decreases. This principle extends to the electric vehicle (EV) sector, where rising interest in EVs could potentially drive up the demand for stocks like Nikola.

Economic data, interest rates, and company performance are also key drivers of stock demand, influencing how much traders are willing to pay for Nikola's shares.

Additionally, significant market events such as initial public offerings (IPOs) or the issuance of new shares can affect the supply side, impacting stock prices accordingly. For instance, the March 22, 2024, announcement that Nikola would scale up truck production may have increased trader demand for its stock, reflecting a positive market reaction.

The projected growth in the global EV battery market and expansion of the BEV and FCEV markets may create a more favourable market environment for Nikola's vehicles, potentially influencing its stock price.

How Strategic Partnerships Influence Nikola’s Stock Value

Strategic partnerships can play a critical role in Nikola Corporation's growth strategy, providing essential performance improvements in a competitive market. Collaborations, particularly in cutting-edge technology sectors, may signal the potential for enhanced business capabilities and market expansion, which could positively influence trader sentiment and potentially boost stock value.

For example, the May 2023 agreement between Nikola and Voltera, a company that builds, owns, and operates EV charging facilities, to develop up to 50 hydrogen fueling stations across North America underscores such strategic initiatives that could attract trader interest and possibly drive stock prices higher.

These alliances not only can diversify Nikola's revenue streams but may also grant the company access to resources that might otherwise be challenging to secure while potentially enhancing Nikola’s public image. For instance, the company's December 20, 2023, 10-year agreement with FirstElement Fuel to support Nikola’s hydrogen fuel cell trucks with refuelling services highlights how these collaborations can position Nikola favourably in the burgeoning zero-emissions vehicle market, thereby potentially supporting higher stock valuations.

Nonetheless, the success of these partnerships is crucial, as any failure or underperformance can erode trader confidence and negatively impact stock value. Nikola's collaborations with prominent firms like Bosch, CNH Industrial, Hanwha Group, and Nel Hydrogen reflect its strategic approach to solidifying its market position and enhancing shareholder value. If successful, such alliances can be instrumental in maintaining a competitive edge and may significantly influence the trajectory of Nikola's stock price by instilling trust in the company’s long-term growth prospects.

Impact of Clean Energy Developments on Nikola’s Stock Performance

If demand for green technologies and alternative energy sources rises, the shift toward renewable energy may significantly influence NKLA’s stock price.

Following the 2020 U.S. Presidential election, clean energy stocks, including Nikola's, surged. This rise in share prices was attributed to increased speculation driven by expectations of supportive policies like rejoining the Paris Climate Accord and aiming for a decarbonized power sector by 2035.

Global climate initiatives and the growing emphasis on reducing carbon emissions can create a positive outlook for alternative energy companies, directly linking the value of carbon emission permits to the stock prices of companies like Nikola.

Nikola's Phoenix Hydrogen Hub LLC project, with its loan application for up to $1.3 billion under the U.S. Department of Energy's (DOE’s) clean energy projects, highlights the company's efforts to secure funding for hydrogen infrastructure, which may influence trader perceptions and future stock performance.

These developments underline how evolving clean energy policies and capital inputs could potentially drive Nikola’s stock price dynamics by aligning with broader market trends toward sustainable and renewable energy sources.

Environmental Policies and Their Effect on NKLA’s Stock Price

Environmental policies can play a crucial role in shaping the stock prices of companies in the automotive and energy sectors by directly impacting operational and market dynamics. Policies that encourage the adoption of clean energy and the reduction of greenhouse gas emissions may drive demand for EVs, thus potentially elevating the stock prices of EV manufacturers like Nikola.

Regulations, such as fuel economy and zero-emission vehicle mandates, can significantly influence stock performance by creating a favourable environment for companies that align with these standards.

Companies with robust environmental performance have tended to enjoy higher stock prices and attract better returns than those with weaker environmental credentials. Thus, Nikola Corporation’s stated commitment to monitoring and reducing its emissions, energy use, and its waste footprint, along with its focus on resource conservation and waste diversion in manufacturing, may position it more favourably under these policies, potentially boosting its share price.

Other Influencing Factors: What Drives Nikola’s Stock Price?

Beyond the aforementioned elements like supply and demand, strategic partnerships, clean energy developments, and environmental policies, myriad other factors can drive Nikola’s stock price up or down.

Market Sentiment

Market sentiment, which reflects traders' overall moods and attitudes, can be a key driver of Nikola stock price fluctuations.

Positive news or developments related to a company or industry, such as the automotive industry as a whole or, more specifically in Nikola's case, the EV sector, can lead to a surge in trader optimism, driving prices up.

Meanwhile, negative news or uncertainty can trigger selling pressure, causing share prices to decline.

Regulatory Compliance

Compliance with financial regulations and standards can also impact Nikola’s stock price.

For example, Nikola’s share price fell on January 19, 2024, when it received a notice of noncompliance with a minimum-bid listing requirement from the Nasdaq exchange.

Financial Performance

Nikola’s financial performance, including earnings and revenue growth, can significantly affect NKLA's stock price.

For instance, in the fourth quarter of 2023, Nikola delivered 35 FCEVs, a positive development for the company. Conversely, poor financial results or missed targets can erode trader confidence, leading to a decline in the stock price.

Macroeconomic Conditions

Broader economic trends and events, particularly those impacting the automotive sector, can impact NKLA’s share price. Factors such as interest rate fluctuations, inflation, and changes in government policies can influence trader sentiment and stock performance.

For example, the global shift toward clean energy has created a more favourable macroeconomic environment for EV manufacturers like Nikola.

Additionally, trade policies and economic growth rates in key markets can also play a crucial role in shaping the demand for Nikola’s products.

Exploring Nikola CFDs: A Way to Trade NKLA

Having explored the various factors that may influence Nikola's stock price, it's time to consider how you can actively engage with NKLA's movements. One of those methods is through contracts for difference (CFDs). CFDs allow traders to speculate on NKLA's price fluctuations without owning the underlying shares. This means you can speculate on Nikola stock without the need for a large capital outlay which may be needed to purchase actual shares.

One of the features of trading Nikola CFDs is the ability to use leverage, which can amplify both potential gains and losses. For example, with a margin of 10%, you need only $1,000 to gain exposure to $10,000 worth of NKLA.

With the flexibility to trade in both rising and falling markets, CFDs can be an attractive option for traders looking to take advantage of short-term price movements driven by factors such as new product releases, unexpected earnings results, or shifts in market sentiment discussed in this guide.

However, it's essential to remember that while increasing capital exposure can boost potential gains, it also escalates both risk and potential losses. Therefore, traders must prioritise making well-informed decisions before entering trades.

Conclusion: Understanding What Moves Nikola’s Stock Price

Understanding what moves NKLA’s price requires a comprehensive look at various influential factors, from market demand and strategic partnerships to clean energy developments and regulatory impacts. By examining these elements, traders can gain a clearer picture of how Nikola's performance and the broader market dynamics may affect its future stock value.

For CFD traders, recognizing these drivers is crucial, as it allows for strategic trading decisions based on the expected movements of Nikola's stock price.

As Nikola continues to navigate the complexities of the electric vehicle sector, staying informed about these critical factors will be essential for making informed trading decisions. Whether it's the rise in clean energy trends, evolving environmental policies, or strategic business moves, knowing these drivers can provide valuable insights into the future movements of Nikola's stock price.

If you’re interested in Nikola CFD trading, you can begin trading NKLA CFDs on Plus500.

NKLA Stock Price FAQs

What can cause NKLA's share price to go down?

NKLA's share price can decline due to factors such as poor financial performance, regulatory challenges, market saturation, or negative news about the company or the EV sector. These issues can diminish trader confidence and lead to selling pressure.

What can cause NKLA's share price to go up?

Positive developments like new strategic partnerships, favourable regulatory changes, strong financial performance, and increasing demand for electric vehicles can potentially boost NKLA's stock price. These factors can enhance trader sentiment and drive the stock value higher.

How can clean energy developments influence NKLA's stock performance?

Clean energy developments can potentially affect Nikola's stock price by aligning the company with global trends toward renewable energy and reduced carbon emissions. Policies and market developments that support clean energy could create a more favourable environment for Nikola's growth, leading to potential stock appreciation.