Why Nikola Stock Plummeted Today
Nikola (NASDAQ: NKLA) stock lost ground again in Monday's daily trading session. The company's share price ended the daily session down 9.9%, according to data from S&P Global Market Intelligence.
Nikola stock saw big sell-offs today on the heels of news that the company's founder Trevor Milton had been sentenced to four years in prison for defrauding investors. The electric vehicle specialist's share price has fallen roughly 46% year to date, and it trades down 99% from its lifetime high.
Nikola's former CEO is looking at a longer prison stay
In a court ruling issued today, Milton was convicted of defrauding investors and sentenced to a four-year prison stay. Today's ruling follows Milton's 2022 conviction for two counts of wire fraud and one count of securities fraud. Milton, who previously served as the company's CEO, was found guilty of deliberately misleading investors about the state of Nikola's electric vehicle development and overall business.
Is the sell-off for Nikola stock a buying opportunity?
Nikola stock has continued to see volatile trading in 2023, and its share price will likely continue to make big moves in the near term. While it's possible that investors could score solid returns by purchasing shares at today's levels, the EV stock continues to look too risky for most investors.
NKLA PS Ratio (Forward) data by YCharts
Despite valuation-crushing sell-offs for the company over the last few years, Nikola stock continues to trade at roughly 21 times this year's expected sales. That's an incredibly growth-dependent valuation for a company that continues to post sizable losses and has had such a fraught and controversial track record across its relatively short history as a publicly traded company.
While it's possible that Nikola stock could see short-term rebounds that allow investors who buy shares at today's prices to see strong returns, the company's long-term outlook remains uninspiring. There's little sign that Nikola's business will succeed over the long term, and those who buy the stock could still wind up suffering big losses even though it has already fallen so dramatically.
Should you invest $1,000 in Nikola right now?
Before you buy stock in Nikola, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Nikola wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of December 18, 2023
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
