GM-Nikola Deal in Flux
Three weeks ago on this show, we talked about Nikola, the electric truckmaker because. On Day, shares of Nikola were more than thirty five percent on the news of its partnership with General Motors. That was a lifetime ago. The deal was supposed to close today. That's not going to happen in terms of closing today and. This seems like a story in Flux Maria because a couple of hours ago I was looking at that. The available information and thinking to myself well, I think I. THINK GM is backing out of this deal. We had the whole thing with Nikola and the founder Chairman of the board resigning immediately. Deleting his social media accounts, allegations coming out and it, and it seemed like. A couple of hours ago. Maybe Chan was just backing off altogether. Now it looks like they might be just negotiating better terms because shares of Nikola were down first thing this morning. then. All of a sudden. They spiked up eleven twelve percent Where do you think this is going? It's really interesting. So Nicola is has ambitious to make electric and hydrogen powered trucks. They want us and lease battering hydrogen-powered semi trucks, tip businesses for anyone who wasn't sure what the company did. So what this deal was supposed to be was GM would get two billion and Meka ls stock paid for with services and various. GM. Parts and components and GM engineer and manufactory manufacturer the manufacturer, the battery and Fuel Cell Versions of Nicholas Badger track. So at that time when they were talking about three weeks ago. which. Feels like a lifetime ago two billion dollars was an eleven percent stake because Nikola at one point, their values over thirty billion, which is larger than Ford and now the market cap is less than seven billion. So that two billion went from an eleven percent stake toe mustard over a twenty percent stake. So it's interesting if they're negotiating different terms, what that will look like going forward because two billion is now a much more sizeable chunk of that company than it was a week or two weeks ago. Yeah I mean just in terms of Nicholas stock three weeks ago on the show we when we were talking about it, it was fifty dollars a share today it's below twenty even with this little bump up. That we're seeing and it just. I want to give the benefit of the doubt Mary Barra the CEO of General Motors and her team. Because she's a very experienced you know for for whatever you think of GM, the company and whatever you think of the stock and from a stock perspective, it has not been a particularly great place to be over the last five to ten years. That being said, she's an experienced professional in this business. So I wanNA give her and her team to benefit of the doubt. I I look at. Everything that is unfolding. And I have the thought that I've had at various points in my life as an investor I look at a either an individual company or just an evolving situation and I just conclude there too many question marks here. There are just there are too many unknowns there too many question marks I kind of want to wait for the dust to settle to see what the new terms are. If the deal actually closes and then see where think shakeout. Yeah I think Nikolas definitely more of a speculative investment since a cart and they haven't actually manufactured car yet but I will say, I, am on the side of I really want them to do. Well, I hope that a deal works out with GM, because I think the future of electric powered vehicles is one that we're moving towards I think it's one that I would like to invest in I. Think Right now betting on them is completely speculative because you have no idea what they can produce but I do think it's important to note that within all of this is shown that there is a. Demand, they had an order for over twenty five, hundred electric garbage trucks from public services they there was an order I over fourteen thousand tracks from Ab Inbev which are planning to use them for long haul deliveries from breweries to distributors. So I think it's important to note that no matter what happens with this company specifically I think this trend is one that's going to have a lot of tailwind. So if I was working at GM and I wanted to be a part of that I, don't think this is a bad option I. Don't think that this deal is necessarily completely a bad idea for GM.