Exciting developments are taking place in the electric vehicle (EV) sector as several stocks experience significant gains. QuantumScape Corporation (NYSE: QS), a solid-state battery maker, and NIO Inc. (NYSE: NIO), a Chinese EV manufacturer, have seen their stock prices surge by approximately 25% and 26%, respectively, since last Friday. However, the standout performer is electric truckmaker Nikola Corporation (NASDAQ: NKLA), with its shares skyrocketing over 100% as of Thursday afternoon, according to data from S&P Global Market Intelligence.
Nikola’s Stock Surge Driven by Key Factors
Nikola’s remarkable surge can be attributed to several factors. The company recently adjourned its annual shareholder meeting and plans to reconvene it on July 6. This meeting is crucial for Nikola to gain approval to increase the authorized number of shares, enabling them to raise future capital. Although the proposal has received 77% of votes in favor so far, more affirmative votes are needed for it to pass. Given the current trend, it seems likely that the proposal will succeed. This additional capital will be crucial for Nikola’s continued sales growth and business expansion.
The stock’s momentum has also been influenced by other market factors. Following the release of this week’s macroeconomic data, which indicated lower inflation rates, investors have shown increased interest in growth and technology stocks. The tech-heavy Nasdaq Composite index has risen by approximately 3.5% this week. As inflation eases and interest rates potentially decline, the cost of raising future capital becomes more favorable.
Furthermore, as of the end of May, nearly 22% of Nikola’s outstanding shares were sold short. This situation has likely led some investors to cover their short positions, resulting in a short squeeze. QuantumScape also experiences similar short interest, which may explain the surge in its stock price this week.
QuantumScape received a significant boost after Toyota’s recent technical update, revealing the global automaker’s plan to transition its next-generation batteries to solid-state technology—an area in which QuantumScape specializes and is on track to commercialize within the next few years. Toyota aims to apply this battery technology in commercial vehicles by 2027 or 2028, potentially making QuantumScape the first company to enter the market.
NIO’s stock performance this week has also been influenced by the aforementioned macroeconomic trends. In addition, the Chinese EV manufacturer announced a price reduction across its entire lineup, equivalent to approximately $4,200. This represents a decrease of about 6% to 9% for NIO’s range of EVs, and investors anticipate that this move will boost sales.
Recent Stock Movements Not Reflective of Fundamental Changes
While short squeezes and favorable macroeconomic news have contributed to the recent surge in these stocks, investors should remain focused on the underlying businesses. Both Nikola and NIO are yet to generate profits, and QuantumScape has not yet generated any revenue.
These companies are still speculative investments, and the recent stock movements should not be interpreted as indicative of significant fundamental changes in their operations. Nevertheless, each company is making progress to enhance its future prospects, and optimistic investors are speculating on their success.
Edward Cooke is a financial analyst, freelance writer, and editor. He has six years of experience in financial journalism. He has an in-depth understanding of equities markets, tracking major indices and providing real-time analysis on stock price movements, corporate earnings, and market sentiment.
