Nikola (NKLA) Q2 2020 profit – Cash balance, Badger Pre-Orders and production partners are important points of attention
Nikola Corporation (NASDAQ: NKLA), the pre-earnings company emerging for electric and hydrogen powered trucks, caught the attention of private investors in early June as its shares essentially doubled within a single trading day period. However, since then, the stock has stunted as investors struggle with the effects of liquidating securities held by the company’s PIPE investors. Nevertheless, the company is still valued at $ 13 billion, roughly half of Ford’s market cap.
Today, Nikola is once again in the spotlight as it prepares to announce its first publicly owned profit following a merger between Nikola Motors and VectoIQ – a Special Purpose Acquisition Company (SPAC) – in June. However, it should be noted that the company has not started any formal commercial activities, which makes its potential revenues insignificant. Investors will, however, closely monitor Nikola’s cash balance, pre-orders and any operational guidance during the profit call to form an opinion on the company’s price.
We will continue to update this post with relevant details as it emerged during the earnings call. Therefore, readers should regularly refresh this page.
Nikola Q2 2020 profit score card
For the three months ended June 30, Nikola has reported a cash balance of $ 698 million and a net loss of $ 86.65 million. The company reported a custom EPS of – $ 0.16. Sales were, as expected, nominally $ 30,000 and were generated by the company’s solar energy sector. The company’s main financial measures are as follows:
(All figures are in thousands of dollars)
The company has unveiled the following business highlights:
- Signed a purchase order with Nel for electrolysis equipment capable of producing up to 40,000 kg of H2 per day.
- Nikola Tre’s production test units are underway in Ulm, Germany and are expected to be completed in the fourth quarter of 2020.
- Nikola called for repayment of outstanding public warrants in Q3 2020.
Nikola previously reported about 14,000 pre-orders for its Class 8 electric trucks, which translates into potential sales of up to $ 10 billion. However, the company did not require a cash down payment on those pre-orders. Nikola did require a cash deposit of at least $ 250 – rising to $ 5,000 for the Honey reservation package – when it opened pre-orders for the Badger electric pickup on June 29. On July 2, the company revealed it had registered 1,000 reservations through the $ 5,000 Honey package, which translated into $ 5 million in deposits. Nikola Corporation executive chairman Trevor Milton tweeted that the company was “Tracking about 1,500 deposits a day without ties or 200 million future earnings / day”. According to these details, Nikola collected less than 5,000 badger reservations in the immediate aftermath of opening pre-orders. Should the company reveal any further details regarding these pre-orders, we will add those details here as soon as possible.
Another important focus for Nikola investors is the company’s current cash balance. At the moment, Nikola has only a few big money sources. First, it continues to collect proceeds from the Badger Electric Pickup Reservation. Second, Nikola received a $ 700 million infusion from the PIPE investors. Third, it would receive at least $ 264.5 million from the exercise / redemption of all public warrants.
The holders of NKLAW – the symbol of the company’s warrants – can currently exercise these securities in cash. When a holder chooses to exercise the warrant in cash, that person will receive 1 Nikola ordinary share for every NKLAW warrant he owned. Keep in mind that Nikola had 23 million public warrants. The company has already announced that it will repay all remaining unexercised public warrants on August 21, 2020. It is crucial to remember that private warrants are not currently being repaid. According to the form 424B3 filed by Nikola, the outstanding ordinary shares will increase to 384,794,478 (384.79 million) if all outstanding warrants are exercised.
On August 8, Trevor Milton revealed that Nikola’s cash balance would reach $ 940 million by the end of August 2020:
There is $ 881 million in cash in our account today, with $ 60 million left from the warrants, so $ 940 million in our bank account at the end of August. I would say @nikolamotor is in a great place. Look where we’re going by the end of the year! #emissionsgameover
– Trevor Milton (@nikolatrevor) August 3, 2020
As for the significant cash outlay, building the facility in Arizona will cost at least $ 600 million.
Again, should Nikola provide additional material updates regarding his cash position during the profit call, we will include that update here.
Finally, investors are eagerly waiting for Nikola to reveal his production partner when it comes to the Badger electric pick-up. Keep in mind that the Badger truck will be officially launched in 2022. In addition, Nikola aims to launch its Class 8 electric commercial trucks built in conjunction with CNH Industrial in the second half of 2021. The company is already doing this build prototypes from Nikola Tre at its location in Ulm, Germany. Once completed, this facility can produce up to 10,000 units per year. Moreevr, Nikola broken ground on July 23 in Coolidge, Arizona for the construction of a $ 600 million facility that has the capacity to produce 35,000 trucks per year. The first phase of the 1 million square meter production facility will be completed in 2021, with phase 2 entering the completion phase 12 to 18 months after that. Any further updates in this regard will be added here.