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May 27, 2020

The New Tesla and How to Get in Early

Frank Cabibi

As a trader, I continuously look for relatively short term swings, pullbacks in momentum, relative strength or trend continuations. Rarely, do I look for solid investments because it is too hard to gauge how profitable a company will be years from now. The cannabis industry is an example of one investment I have held over the years. However, I do come across individual companies that I believe will be profitable in the future every now and then. That company is NASDAQ's own VectoIQ (VTIQ).

Remember that this is purely based on the information I gather, as well as my own opinions. 

As I say that, let’s get into why I like this stock. 

VTIQ is a specialty acquisitions company that is trying to merge with Nikola Motors, an AI company that specializes in electric motor vehicles, specifically semi trucks. They have operated as a private LLC, and are being offered a $3.3 billion acquisition from VTIQ. The zero emissions company worked out a deal with VTIQ, and will eventually be listed on the NASDAQ as NKLA. The way Nikola Motors creates zero emissions is through turning hydrogen fuel cells into electricity.  

The bulls:

Investors are reminded of Tesla when looking at this stock and want to get in while it’s in the early stages. They already have over 14,000 preorders for their tractor-trailers that they will begin manufacturing next year. Annhuesor-Bush (NYSE: BUD) already has an $800 million order in place for 2021. CNH Industrials (NYSE: CNHI) invested $250 million in Nikola Motors for the choice of battery powered engines as opposed to hydrogen fuel engines. The founder of VTIQ, billionaire Trevor Milton, has managed to receive over $4 million in Paycheck Protection Program which is very beneficial to his company and his employees. 

Counterpoint:

With oil markets down and virus worries, investors are concerned of the potential market downturn if a recession is to come. As a trader, it’s hard to stay in one particular stock for an extended period of time. Having said that, one can trade the vote by buying in before June 2, and waiting for the probable pass from the shareholders. The price does look a little high following the news of the merger, and investors might be looking for some drawdown before putting their money in.

What’s Next:

On June 2, at 11:00 am, there will be a shareholder meeting where they will vote on the merger. If the vote passes through the shareholders, VTIQ will then be named: NKLA.The company will then receive $500 million in cash from big investors, and we could see a surge in VTIQ’s price.

I am currently holding the stock (VTIQ) and waiting for the vote. I may decide to trade the news about the vote when it happens, and possibly holding on to this company as a potential investment.

If you are interested in joining our trading community, make sure to check out the link below. You will have access to our chat rooms, trade alerts from our top traders, and educational content:

https://a1trading.com/vip-membership-m/

Hope to see you in there!

Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

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