Nikola needs to give investors some comfort, and get more customers: Analyst

Dan Ives of Wedbush Securities talks about the issues faced by Nikola and whether the company will sharpen its focus down the road. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

Nikola shares slid 9% Wednesday after the company announced that it has terminated its partnership with Republic Services to jointly develop electric garbage trucks.

Nikola said the decision was made after both companies “determined that the combination of the various new technologies and design concepts would result in longer than expected development time, and unexpected costs.”

“This was the right decision for both companies given the resources and investments required,” Nikola CEO Mark Russell said in a statement. “We support and respect Republic Services’ commitment to achieving environmentally responsible, sustainable solutions for their customers.”

When the deal for thousands of trucks was announced in August, Nikola’s stock surged 22% to $44.81 a share. The shares are trading at about a third of that price now. Shares were trading at $15.33 Wednesday morning.

“In a nutshell, this is a ‘gut punch’ for investors that were hoping this monster order was a potential paradigm changer for Nikola and reference customer going forward,” Wedbush analyst Dan Ives said in a note to investors Wednesday.

Republic Services confirmed the deal’s termination and said it remains committed to electrification, citing continued collaborations with Mack Trucks, Peterbilt Motors and a recent investment in California start-up Romeo Systems.

“We look forward to working with all of our OEM partners to capitalize on innovative new technologies, advance our fleet electrification goals and drive responsible growth and value creation, and are planning to make additional purchases from various suppliers in 2021,” Republic said in a statement.

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