Profit Pregame

How to Prepare For a Possible Nikola Meltdown

Can Nikola survive this?

Nikola has been dealing with some bad press, and they just addressed it.

What’s happening?

Nikola is not a new name around here. As we’ve talked about before, the electric car industry is the future. And daily, it seems like a new name joins the race to be the leader. But the top leaders remain – Tesla, General Motors, and Nikola.

But Nikola recently hit a snag – and a big one.

The U.S. Securities and Exchange Commission is looking into short-seller claims that the company misled investors. Hindenburg Research is a forensic financial research company – and they had a lot to say about how Nikola has been conducting business. The claims included that GM made a deal with Nikola out of desperation, there’s no Nikola Tre in pre-production, and Nikola has no functioning prototype for the Nikola One, Two, or Tre.

Nikola’s founder, Trevor Milton, released a six-page statement rejecting Hindenburg’s claims. The company also said it had briefed the Securities and Exchange Commission regarding its concerns about the report.” It also has acquired a law firm regarding potential legal action.

But despite the denial – there was one claim Nikola could refute…

Where’s the money?

Back in 2016, Nikola released a promotional video hyping up the future of the company. And it also showed the highly anticipated Nikola One truck driving rapidly along a two-lane highway – fully functioning. But Hinderburg called the company’s bluff – claiming that the Nikola One wasn’t anywhere close to being functional.

And that wasn’t all. Hinderburg also claimed that Nikola had towed the truck to the top of a small hill and let it roll down. The company allegedly tilted the camera to make it look like the truck was moving on its own.

Nikola’s lengthy press release refuted many claims, but when it came to the Nikola One, the company admitted that the truck wasn’t actually functional. And it seems like investors didn’t take kindly to the news seeing the stock plummeted once the news was released.

How can I get some?

We have seen this kind of game with TSLA before – as short sellers take on companies – and last time, Tesla won. And many investors are wondering if Nikola will have the same outcome – but I think this time around will be different.

And while in the long run, NKLA may find redemption, at this current time, there’s a better way to play this evolving story. And that is by actually playing Nikola’s recent partner – General Motors.

Here’s what you need to realize that many investors might be missing: GM will end up with a black eye from all of this. Despite the company’s attempt at due diligence, I believe that GM has more problems coming their way, and the stock is most likely looking at a rocky future. And that’s precisely why I plan to sell GM on any rally. And I plan to do this by buying put spread in GM as it offers a great reward to risk setup.

In the spotlight: The grocery boom

When the pandemic began in March, grocery stores were haunted by empty shelves as consumers rushed to stock up on food and household staples. In turn, this drove up sales at popular stores like Walmart and Kroger.

For instance, in March, the grocery industry saw a 31.2% year-over-year growth. In August, it rolled in at 11.5%.

This tells us one thing – the grocery boom is officially over for major grocery stores.

Online sales have also leveled out. Delivery and curbside pickup sales totaled $5.7 billion in August, down from $6.6 billion in May and $7.2 billion in June. And these dropping numbers make sense as consumers have fallen into a closer to regular routine. Restaurants have reopened, which has led to a shift in spending. Stimulus checks and the extra unemployment boosts have ended as well-meaning less money to put into the market.

On top of this, people aren’t stocking up or hoarding food any more due to restrictions being lifted all over the country. Consumers are adapting to the “new normal.” With that said, the opportunity to profit off the consumer panic – so, look to other sectors for your next big win.

What Will that Next Winning Sector Be?

While I can’t make any guarantees on that, there’s one thing I’m very sure of…

Whichever sector ends up showing the best profit potential, my S.C.A.N. trading algorithm will find it!

Ever since I created it, S.C.A.N.’s recommendations have been handing me and my Project 303 readers some incredible returns…

In fact, on Monday, we scored another 100% winner!

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