Nikola Corporation VTIQ Special Report
My macro and equity research shop Transformity Research (which succeeded my original syndicated research company ChangeWave Research founded in 2000 and now owned by Standard &Poors) focuses 100% on discovering, analyzing, and investing long and short in secular transformational change.
We recently added the most transformational growth company we have seen since Tesla, Amazon, and Facebook to our High Conviction Secular Growth buy list. We labeled Nikola Motors "The New Tesla" for a number of important reasons I will summarize.
The tease for Nikola Motors (VTIQ) is this: Knowing what you know today about the future and fortunes being made from electronic transportation technology, if you could go back in time to June 10, 2010, and buy the Tesla IPO at $18, would you?
OF course, you would.
Given that, let me ask you this: Knowing what you know today about the future and fortunes being made from electronic transportation technology, would you buy the NEXT Tesla the only pure-play zero-carbon player in the $600 billion commercial transportation space before it's IPO under $18 today if you could?
For under $18?
Yea I thought so--you would be an idiot not to right?
But what if...what if you could buy one share of the next Tesla for under $18 today and get a warrant to buy another share for just $11.50 or a total basis of $15?
That is the value proposition presented by Nikola Corporation located in Phoenix, AZ. They will be NASDAQ listed under NKLA ticker symbol by end of June in a reverse merger IPO with the VectoIQ Acquisition Corp. SPAC now under the trading symbol of VTIQ.
I have spent a lot of quality time investigating this company (I was tipped off by an NKLA engineer who is part of our vast TR Experts Alliance network this year). Our future valuation models say this $3 billion IPO company is on a very strong pathway to becoming a $100 billion market cap company.
Yes-- our growth and valuation models make NKLA a potential 30X bagger as the world comes out of a deep recession in 2021 and resumes a pathway to 2019 level GDP by 2024.
Why?
One reason is that NKLA is on a very fast track to becoming the crown jewel zero-carbon pure-play on the carbon-heavy $600B long and short-haul commercial transportation industry or better said what Tesla is to the electric consumer vehicle industry.
The truck industry is starting to take the other kind of electric vehicle more seriously. Daimler and Volvo, the world’s two largest makers of heavy trucks by revenues, said they would team up to develop fuel cells for their trucks.
By 2030. On the other hand, Nikola Motors fuel cell-powered electric trucks "ETs" will be on the road in a big way by 2022.
Another reason is that NKLA will undoubtedly become a MUST OWN stock for the $30 trillion ESG (Environment/Sustainability/Governance factor investing) pension investment world (more on that in a moment).
Diesel truck companies in ESG funds? Not a chance. NKLA will continue to be the ONLY pure play on carbon-free commercial transportation basically forever.
Today YOU the non-institutional investor get a rare shot to buy the shares pre-IPO because Nikola is merging with a $200 million in cash Special Purpose Acquisition Company Vector Capital VTIQ in late June (run by the ex-Vice Chairman of GM BTW).
When they merge, NKLA's raises $200 million from escrowed VTIQ funds and another $500 million with a funded private investment in public equity deal run by Fidelity and Morgan Stanley (aka a "PIPE").
The Top 10 Reasons Why We See Nikola as the Next $100 billion Tesla (and Why We Think You Should Own Shares BEFORE the IPO in late June)
1) BECAUSE 100% of NKLA production capacity 2021-2022 is 100% sold out. As of this moment, Nikola has literally sold out their ENTIRE production for the next 24 months! That is right--Nikola has cash deposits and contracts for over $10 billion/2 years of production ALREADY booked with almost EVERY large transportation company in the world.
Who has pre-ordered Nikola Self-Charging Long haul e-truck and short-haul E-Truck? Anheuser Busch, ABInBev, Pepsi, Wal-Mart, Amazon, FedEx, Ryder and many more. Why the massive 2 years sold-out demand?
2) Because the Nikola self-charging electric long haul/short-haul commercial truck has a combined value-proposition that diesel trucks could NEVER EVER match
A. First, every major company that uses long haul transport knows that diesel fuel emissions are getting highly restricted in many key regions (already in Europe, China, and Southeast Asia) all over the world.
B. For consumer brands, using Nikola's fuel-cell charged zero-carbon emission electric truck positions their company as a leading GREEN and global warming killer, not a global warming villain.
If this concept is new to you, go ask a Millennial how they feel about global warming and climate change, OK.
The fact is in 2020 and onward if you are a consumer brand, it's vital to demonstrate your global warming bona fides to the largest market cohort in the world. It is not just enough to speak out AGAINST global warming and killing the earth by 2050. Millennials require global consumer brand companies to show they are doing something BIG and meaningful to fight back and reduce their carbon footprint.
The transportation sector is one of the largest contributors to anthropogenic U.S. greenhouse gas ("GHG") emissions. According to the Inventory of U.S. Greenhouse Gas Emissions and Sinks 1990–2017 (the national inventory that the U.S. prepares annually under the United Nations Framework Convention on Climate Change), transportation accounted for the largest portion (29%) of total U.S. GHG emissions in 2017. Cars, trucks, commercial aircraft, and railroads, among other sources, all contribute to transportation end-use sector emissions.
3) Because the total cost of buying and operating the zero-carbon emission Nikola vehicle is a fixed cost per mile lease for 7 YEARS--and while that cost is comparable to diesel trucks for now
4) Nikola trucks are 100% ready for autonomous/driverless long haul operation which gives Nikola rigs a 15% LOWER per mile cost of operation than loud, slow, deeply polluting diesel rigs (and a relatively simple solution to America's shortage of 100,000 long-haul truck drivers.)
5) Amazing Exponential Growth! Nikola's incredible growth ramp from zero to $10 billion in contracted sales. Look--Tesla was founded on July 1, 2003. In comparison, it took Tesla 14 YEARS to get to $10 Billion in sales.In comparison, Nikola gets to $10 billion in sales in less than 5 years. And 100% of those sales are sold-out TODAY. To Wall Street secular growth investors, they have never ever SEEN sold-out growth like that from an IPO.
6) Nikola's Killer Business Model. Unlike a normal truck sales transaction where the dealer is paid for the truck and then sells service and parts to the truck owner, Nikola gets paid roughly one dollar for every mile their truck in driven (via an all-inclusive 7-year lease).
7) Because $30 TRILLION of ESG Capital is now drooling For Nikola Corp. shares. If you understand the premise of the ESG investing thesis, you undoubtedly see why Nikola is an absolute MUST OWN stock for the now $30 TRILLION in capital dedicated to ESG investing.
ESG investing — strategies that require that the fund managers take a company's environmental, social and governance factors into a serious go-no-go decision-making matrix and standards— grew to more than $30 trillion in 2018, according to Global Sustainable Investment Alliance.
That number is set to keep rising as consumer tastes shift and investors demand more transparency (read "Millennials, Public Endowments and State/Global Pension Plans). FACT: My investment management firm Transformity Family Office is in the process of setting up an ESG 2050 fund just for other Family Offices. I can tell you this--by going public early and 100% pledged to follow ALL the ESG sustainable/social and fully transparent governance standards which you have to follow to be an ESG worthy investment, we see NIKOLA as literally the MOST ESG WORTHY publicly trade stock in the world.
Do this thought experiment with me. Think of all the FORCED buying demand for Nikola stock as it becomes a required member of EVERY ESG index fund. At say a $5 billion market cap, NKLA will be a major part of those market-cap-weighted indexes--and an even bigger part of the NON-market cap actively traded indexes.
Why? Because with ZERO carbon emissions, owning NKLA stock will reduce the carbon footprint of an ESG fund by a lot . . . and in the ESG world, he with the lowest carbon footprint portfolio gets the most money!
Thus, quite literally every ESG fund around the world that invests in U.S. companies will HAVE TO OWN THIS STOCK or turn in their ESG certification. Nikola will also quite literally the FIRST ESG stock we buy with my fund--and Nikola will be the toast of the ESG world in Davos in January 2021 trust me (in person or via Zoom!)
8) The best news? The post-money valuation is just $4 billion. I have spent time some incredible time with our NKLA engineering insider (they are in Phoenix; I am in Scottsdale) doing my due diligence research on Nikola. It is not an exaggeration to say in my 20 years of editing investment newsletters and running syndicated experts research groups, almost every 30-40X winner we have ever recommended (APPL/Monster Beverage/ANSS/WFR/CREE/XM Radio/AMD/Nvidia/TSLA/NFLX) came from one or more members of our investment research syndicates.
So yes, in this case like many of our 20X+ bagger stocks, I first learned about Nikola late last year from one of our Transformity Research Experts Alliance members (TRXA) who is now a fuel cell engineer working on Nikola's technology platform.
I get EVERY question I ask answered by real engineers, not IR folks.
PS--the only pure-play fuel cell-based commercial transportation stock currently in the world is PowerCell Sweden (also backed by Bosch).
Guess what? PowerCell Sweden is already up 355% in 2020.
9) But The Big Colossal NKLA IDEA Is This: Carbon Free Commercial Transportation-as-a-Service at 15-20% LOWER Total Cost vs. Diesel + Driver PLUS it Delivers a Major Consumer Product Halo Effect to Their Customers. The Nikola transformative vision is NOT to build electric trucks. Yes, they are building very amazing long haul e-trucks (see that sexy beast above).
But it's only those who use stored hydrogen together with fuel cells to power the electric motor that makes the commercial transport industry cut greenhouse-gas emissions in order to meet 2030 emission standards in Europe and undoubtedly the rest of the developed world. That is because lithium-ion batteries aren’t powerful enough to carry heavy trucks very far before needing a lengthy recharge.
The fact is only hydrogen tanks can simply be topped up like today’s gas tanks. This is one of the disadvantages of fuel-cell electric vehicles before Nikola--fuel cell recharging Class 8 transportation has always been held back by the absence of refueling infrastructure, as well as the expense of producing clean hydrogen made using renewable electricity.
The killer disruptive big idea from Nikola is that over just the next 3-4 years Nikola is building enough hydrogen refill and battery recharging stations in North America to reach 80% of the most traveled long haul and short-haul trucking routes.
10) Nikola will have a 6-7 year head start on the traditional diesel truck makers.
The Wall Street Journal reported on April 26 that Chief Executive Martin Lundstedt of Volvo quipped on a call with media that for most of his 30-year career "fuel-cell vehicles had been 10 years away." In 2008 Volvo spun a previous fuel-cell venture off as an independent company, PowerCell Sweden.
Now, though, Mr. Lundstedt expects deployment in the late 2020s."
Compare the "last 2020's" target with NKLA trucks batteries charged by an onboard fuel cell by 2021. In addition, it is estimated that a Nikola long haul fuel cell truck goes @800 miles before it needs a refill of...hydrogen! In 20 minutes or less, they are ready to roll another 800 miles without a fill-up.
What is so exciting about Nikola is what it is really selling is an unbeatable value proposition in that by the time autonomous long haul truck driving is legal, Nikola truck will cut the cost of owning, servicing, fueling and driving a long haul (or short-haul) truck by over 15% vs. owning, servicing, repairing and driving a diesel truck.
Key point: Driver cost per mile is basically the same no matter the truck, but the Nikola TRE truck is 100% set up TODAY with 100% autonomous driving technology when autonomous truck transport is legal.
Even better, Nikola is building its national network of hydrogen fuel-based electric battery charging stations with some big national partners like AB Ambev, Wal-Mart and Amazon which will work on the key regional and long haul transportation corridors for ANY Fuel Cell Electric Truck.
Bonus Point: As mentioned, VERY strict European rules introduced last year force truck manufacturers to reduce the emissions of their fleets substantially by 2030. While strict emission regulation makes all the legacy players scramble, Nikola Motors will have the E-trucks and the fuel cell fueling networks 5 years ahead of the fat and happy legacy truck players.
Eventually, at least one of the giant companies will cry Uncle and make Nikola an offer they can't refuse.
Double Bonus Point: Did you know Bill Gates is building a $billion "tech city of the future" in Belmont, Arizona. Now guess who is building a $billion manufacturing plant of the future perfectly adjacent to this new 100,000 population city of the future?
You got it--Nikola Motors. They will have the assembly plant of the future right next to an amazing city of the future the size of Salt Lake City.
Coincidence? Not a chance.
Final Point: When up and running, the NIKOLA's ZERO carbon footprint Commercial Transportation-as-a-Service is right up there with all the biggest wealth building transformative secular changes I have tracked since the publication of my NY Times best-selling books "ChangeWave Investing" and $Billion Green: How to Profit From the Green Energy Revolution."
IN my green investing book, I actually fanaticized about fuel cell transportation in 2009--and now it is soon to be a reality.
So yes, I am unabashedly POUNDING the Table for VTIQ shares Buy Under $20.
We are lights out crazy about this company. I am also pounding the table for you to buy the VTIQU units today <$25 which has one share of stock and a warrant to buy another share at $11.50--and put it away and not look at it for 24 months. NOTE: I fully expect NKLA share to ramp higher when they are available for public trading just like Tesla did as they ring the NASDAQ buzzer and spend the next 72 hours on a mammoth TV and print media tour.
I GUARANTEE on Millennial stock trading platforms like Robinhood and others the VTIQ ticker will be in the top 5 traded shares of the week (How do I know? Dude I have a LOT of millennial subscribers to my growth investing newsletters).
PS: For you engineering types, here are ALL the important background data and facts behind this once-in-a-lifetime pre-IPO opportunity.
Here is my link to the NKLA business merger deck--You MUST read this amazing deck which is no longer available to the public (but I got one anyway--thanks to our insider).
Here is the NKLA video Analyst Day introduction
Here is the first announcement on CNBC of the merger
Here is the Fox Business interview on the merger (let the ad run)
Here is the press release on the merger and company.
Here are just a few of the 413 Articles on Nikola.
NKLA Merger Transaction Details
NKLA Q&A
VectoIQ currently has three types of securities outstanding. Common shares trade under VTIQ. Warrants trade under VTIQW. Units (each consisting of one common share and one warrant) trade under VTIQU. Both the warrants and common shares will remain outstanding following completion of the transaction. The ticker of the common shares will change to NKLA, and the ticker of the warrants will change to NKLAW. At the closing, each unit will automatically separate into its components (one share of common stock and one warrant).
What percentage ownership in Nikola will the SPAC shares in VectoIQ receive? Assuming no redemptions, public VectoIQ shareholders will own approximately 6%, and VectoIQ sponsor shareholders will own approximately 2% of Nikola.
If I have 1,000 VectoIQ warrants, will I have the right to buy 1,000 shares of NKLA stock at $11.50? Yes. The warrants that trade under the ticker VTIQW will remain outstanding following the transaction and trade under a new ticker, NKLAW. Each warrant has a 5 year exercise period from the closing date of the transaction and is exercisable into one share at an $11.50 exercise price.
If I own 1,000 VTIQU units, how many shares of NKLA, after the closing, do I have a right to buy?
Each unit consists of one share of common stock and one warrant. After the closing of the business combination, you would own 1,000 shares of NKLA common stock and 1,000 NKLAW warrants. These warrants would have the same terms as described in the question above.
What was the implied enterprise value of Nikola when it announced the business combination with VectoIQ? $3.3 billion valuation or 1X 2022 pre-sold truck revenues.
What is the sales multiple valuation of TSLA today? Tesla on April 22, 2020, has a market cap of $120 billion on $24.5 billion of 2019 sales or 5X sales multiple.
In 2020 Tesla has had up to an 8X 2019 sales multiple.
To get the full Transformity Research research report on Nikola Motors, click here. Our Next Millionaire Maker Stock Pick is Here! - Transformity Research