Robinhood vs. The Pros

Nikola Motors (NKLA) is among a popular stock among Robinhood Traders.

In fact, it’s been the second-most added stock on the app over the last thirty days— right behind Genius Brands (GNUS).

And while retail traders have been steadily increasing their stake in NKLA…

The price to borrow shares to short is going through the roof…

It was 772% on Friday for Interactive Brokers customers…

What does that mean?

The stock closed at $65.90 on Friday.

In other words, you would have to pay 7.72 times...

Or $508.78 per year to borrow one share

Now, when you divide $508.78 by 365 days…

They were paying $1.39 per share per day to borrow stock.

That’s why the cost of put options is so expensive.

The 7/17 NKLA $65 puts are priced for about $27 a piece.

If you go even farther…

The 1/22 NKLA $65 puts are priced at around $47

If you sold those put options, and collected $47…

Your break-even point is $18.

That’s how low the expectations are in NKLA.

Even though…

4 days ago… The team at Cowen called NKLA “more than just a truck company” and slapped it with a $79 price target.

It appears traders are focused on:

S-1 Filing To The SEC

Nikola Corporation

Up to 53,390,000 Shares of Common Stock

Up to 23,890,000 Shares of Common Stock Issuable Upon Exercise of Warrants

This prospectus relates to the issuance by us of up to an aggregate of up to 23,890,000 shares of our common stock, $0.0001 par value per share ("Common Stock"), which consists of (i) up to 890,000 shares of Common Stock that are issuable upon the exercise of 890,000 warrants (the "Private Warrants") originally issued in a private placement in connection with the initial public offering of VectoIQ and (ii) up to 23,000,000 shares of Common Stock that are issuable upon the exercise of 23,000,000 warrants (the "Public Warrants" and, together with the Private Warrants, the "Warrants") originally issued in the initial public offering of VectoIQ. We will receive the proceeds from any exercise of any Warrants for cash.

This prospectus also relates to the offer and sale from time to time by the selling security holders named in this prospectus (the "Selling Securityholders") of (i) up to 53,390,000 shares of Common Stock (including up to 890,000 shares of Common Stock that may be issued upon exercise of the Private Warrants) and (ii) up to 890,000 Private Warrants. We will not receive any proceeds from the sale of shares of Common Stock by the Selling Securityholders pursuant to this prospectus.

Our registration of the securities covered by this prospectus does not mean that the Selling Securityholders will offer or sell any of the shares. The Selling Securityholders may sell the shares of Common Stock covered by this prospectus in a number of different ways and at varying prices. We provide more information about how the Selling Securityholders may sell the shares in the section entitled "Plan of Distribution."

Our Common Stock and Public Warrants are listed on the Nasdaq Global Select Market under the symbols "NKLA" and "NKLAW," respectively. On June 12, 2020, the closing price of our Common Stock was $64.00 and the closing price for our Public Warrants was $23.02.

Traders believe that this liquidity event will dilute the shares…

Hence why they’re willing to pay so much to borrow to short the stock…

And the reason why the puts are so darn expensive.

This liquidity event should happen within the next 1-4 weeks.

However, the firm is set to open reservations for its electric/hydrogen pickup Truck on June 29th.