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Nikola Shares Rise More Than 500% Since March Lows. What's Going On?

Published 06/18/2020, 02:41 AM
Updated 07/09/2023, 06:31 AM

Today, Bloomberg News suggested that the CEO of wannabe electric truck maker, Nikola (NASDAQ:NKLA), lied at a 2016 event about having a big-rig prototype that was “fully functional.” The stock bubble barely blinked. In fact, NKLA actually rose 1.8%.

Nikola Corp Chart

The company has yet to produce a single-vehicle. What’s more, it surreptitiously procured $4 million in federal Paycheck Protection Program (PPP) forgivable loans.

Nevertheless, Nikola’s share price has risen more than 500% since the March lows. It is currently valued at a market capitalization the size of Ford (NYSE:F)

Tesla (NASDAQ:TSLA) share price gains have been equally ridiculous. The company has struggled to turn a profit in its decade on Wall Street. It produces one-tenth the number of vehicles as Toyota (NYSE:TM) and has greater debt woes than Toyota. Still, Tesla is now the world’s most valuable automaker.

Stock Bubble Tesla Stupidity

Crazy is as crazy does? Keep in mind, this is happening amid a greater recession than 2008’s so-called “Great Recession.

The S&P 500 fell more than 50% from October of 2007 to March of 2009. And the market required five and one-half years to break even from the economic harm caused by the “Great Recession.”

SPX Index Chart

Bear markets of this sort of magnitude are the norm in periods of significant economic contraction. (See the red box below.)

NY Fed Economic-Activity Index

Here in 2020, we have a much deeper recession that will leave scars on the economy for years to come. Yet the Federal Reserve has been remarkably successful in blowing the bubble back up to its pre-pandemic price. in just three months!

SPX Chart

One might shout from the rooftops in an attempt to rationalize the irrational. Yet the stock bubble has, undoubtedly, stopped making sense.

Latest comments

Toyota makes good cars for middle class, Tesla makes high-end cars and ROCKETS!! I always thought Tesla was way overpriced but  when I saw the rocket launching and landing perfectly, I believe Tesla will be 2000 dollars per share by next year.
Fact is that the Fed is part of the game and it's not the first time it intervenes to try to calm the markets. So if anyone was waiting or still is for a stock market depreciation like in the 1920s, I don't think it is going to happen. Also it would mean many people would be accepting huge losses. Suicides in some cases, so I think it's good it is the way it is.
Nikola is clear just bubble However How you dare to say samething similar about Tesla That’s redicoulus you said about long run inovation compony “Tesla (NASDAQ:TSLA) share price gains have been equally ridiculous.”Ridiculous it is your comments
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