I'm About To Buy Some NKLA

27 בדצמ׳ 2020

Let me be clear: I'm not bullish on NKLA. In fact, I don't think it's a good company at all. Companies with drawings of electric vehicles and fully staffed IR departments don't often add up to solid fundamentals and real revenue. That said, this isn't a fundamental play - it's based on some of the market mechanics I think are happening under the hood.

First: NKLA just busted through an extremely important long term price level at $16.15, then sold off hard a further 15% - making the company extremely oversold in the short term. Just on a technical basis, I would be a buyer somewhere around here in expectation of a short lived price pop.

However: I think NKLA has become an "obvious" short term short play for big and small money alike. When that happens, I like to be on the other side of it, just in case a squeeze occurs and my shares turn into a cheap call option in the event that the stock moves back into the 30's and 40's. Obvious technical breaks like the one at 16.15 can often be traps, suckering in newbie traders into shorting. That dynamic could occur, or the company could start to show some real revenue in the short to medium term. If the company's plans actually pan out, then this is a good price to get involved. Plus, you get the "EV" premium that's touching all of these companies. I think the risk reward down here for a short to medium term trade is very low.

Cheers!