Shares of Nikola closed 10.7% lower on Wednesday after the company lost a massive order following the termination of its contract with Republic Services to develop the industry’s first fully-integrated refuse trucks.
Nikola (NKLA) said, “After considerable collaboration and review, both companies determined that the combination of the various new technologies and design concepts would result in longer than expected development time, and unexpected costs. As a result, the program is being terminated resulting in the cancellation of the previously announced vehicle order.”
Back in August, Nikola had won an order for at least 2,500 electrified refuse trucks from Republic Services, which had an option to double the order to 5,000 units. The electric vehicle maker had anticipated to begin the testing in early 2022 and start full production deliveries in 2023.
Following the announcement, Wedbush analyst Daniel Ives reiterated a Sell rating on the stock and a price target of $15 (0.2% downside potential). Ives wrote in a note to investors, “Given the tidal wave of bad news for Nikola over the last few months this was not the news that investors wanted to see under their Christmas tree.”
Ives added, “The company is making some progress on its core initiatives and now at least the slimmed down GM partnership is done, however the company still has a Kilimanjaro like uphill climb to gain back Street credibility heading into 2021 with today’s news viewed as another step backwards.”
Overall, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 3 Buys, 4 Holds and 1 Sell. The average price target stands at $26.80 and implies upside potential of about 78.3% to current levels. Shares have gained 45.6% year-to-date.