Profit Pregame

This Stock Lost $86.6 Million Last Quarter – Here’s Why It’s Still a Buy

NKLA’s huge run-up hit a snag…

A disappointing earnings report sent the stock spiraling.

What’s happening?

The race of the electric car is one that we’ve talked about a lot here -and for a good reason – it’s really the future of the automobile industry. And it seems like weekly, there’s a new company throwing its hat in the ring. But if we’re realistic, only a handful of companies have concreted themselves in the industry.

And one of those happens to be Nikola.

Now, Nikola has been aiming to be the first producer of electric semi-trucks. And after a year fueled by mostly positive news, the stock has soared as investors have flooded it with cash. But even the strongest runs have to end at some point. And Nikola just hit a wall.

Where’s the money?

On Wednesday, the company released its first-ever earnings reports. The electric-truck maker posted an $86.6 million total loss in the second quarter, more than five times the amount lost in the same period last year.

The company cited disruptions to the firm’s supply chain caused by the coronavirus pandemic, the main culprit for this massive loss. And this earnings report raised a red flag to investors as the stock fell as much as 17%.

But these investors missed something – obviously blinded by the high reported loss. And that is the fact that the semi-truck remains on track to begin production in the fourth quarter. Once production begins, the company expects to build up to 10,000 vehicles in the next year.

So, I still believe in this company’s stock, and here’s why…

How can I get some?

There’s no denying that NKLA had weak earnings, but the focus shouldn’t be strictly on earnings- because there’s a much bigger picture.

What investors really should be asking is the same question TSLA was asked a few years ago. Can NKLA produce the cars in the time frame that is expected?

And I believe the answer is yes.

Truthfully, the outlook for NKLA for me is a positive one despite the poor earnings performance. And that’s precisely why I plan to stay long in this stock as it works through the unexpected hurdles presented to it by coronavirus.

Now, there’s no denying that in the short term, we’ll see some volatility. But I expect to see this stock move higher in the long run, so, I’m NKLA the green “buy” light. Because in the future, I believe you’ll wish you bought it.

So, to summarize…

Even though Nikola recently reported a loss of $86.6 million, a combination of several factors makes its future look brighter and brighter.

Most traders would be scared off by that enormous number… but that’s the beauty of my S.C.A.N. trading system.

It analyzes all aspects of a stock – related trends, historical similarities, etc.

So while most other traders ignore it based off of the headline du jour, we jump on it before the profits spike.

Nikola is just one of the picks that’s triggered my S.C.A.N. system…

Join me and the rest of my Project 303 readers right here for the rest.

In the spotlight: The delivery wars continue

If there’s one industry which the pandemic has helped – it’s the food delivery business. From Grubhub to Uber eats, to DoorDash, each service has seen an explosion of customers to the lockdown orders most of the country faced.

This uptick in demand has led to what many have dubbed the “delivery wars.” And Door Dash is looking to take the lead with its most recent announcement…

The company is launching a new digital convenience store channel to grow its market share in this competitive sector.

The new service is called DashMart. And as of Wednesday, it is officially available on the company’s platform for customers in Chicago; Minneapolis; Dallas; Salt Lake City; the greater Phoenix area; Redwood City, California; and Cincinnati and Columbus, Ohio.

Each DashMart will carry around 2,000 items ranging from household essentials, ready-made meals, and specialty sauces and spices. DoorDash is hoping to challenge significant players in this market like Amazon and Instacart, but only time will tell if DashMart will be everything DoorDash expects.

With that said, this sector has caught my eye during the pandemic, and I’ll continue to keep a close eye on it as these companies grow.

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