The Truth will Save Your Profit

On Monday I discussed the ideology of never selling shares regardless the woes of a company, as long as you trust them in the long term. Today I will have to retrace my words on this topic. I am still very hopeful for what Nikola Corporation (NKLA) can do in the coming years with their hydrogen fuel cell battery powered trucks. I do believe that it can be another major catalyst in the growing world of technology. However, the company is very young, and if you have been invested in it since our first post on it, you are sitting on about a 200% gain per share. This is exactly what we wanted, the stock price is doing great, but NKLA has not made any business moves yet as the trucks will not be released until next year. All they have to show for is the amount of funds they raised through granting warrants to big investors, such as Fidelity. A warrant is similar to an option, except it is usually left for big time investors. They gain the ability to buy a stock at a given price, in the case of NKLA somewhere around $10.30, and once a given date comes around, in this case July 3rd, they have the ability to exercise the warrant and buy their shares at the given price. What is great news for investors is that NKLA is currently trading over $70, and if it stays above this price they will all have a nice looking 600% gain! They would be foolish to not take this profit, unless they really want to ride out the stock through a year where it will not be making too many business decisions. This hurts us smaller investors because the warrants make up a little more than 59 million shares, and the owners of about 44 million of these shares already admitted that they have plans to sell them come July 3rd. This will heavily decrease the stock price, as this is the bulk of the company being given up. Despite all this I am still very bullish on NKLA in the years to come so I will cling to some shares, but a profit of around 200% is not something we can let slip through our fingers.

-Darnel Shillingford

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