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Nikola (NKLA) Stock Plunges 10% Upon Contract Termination with Republic Services

UTC by Ibukun Ogundare · 3 min read
Nikola (NKLA) Stock Plunges 10% Upon Contract Termination with Republic Services
Photo: Nikola Motor Company / Twitter

Over the past year, NKLA has climbed 25.64% and nearly 46% since the beginning of 2020. However, Nikola has lost 28.94% in the last three months.

Nikola Corporation (NASDAQ: NKLA) stock plunged 10% in reaction to the news that the vehicle maker has terminated its contract with Republic Services (NYSE: RSG). Nikola announced the contract termination on the 23rd of December. However, at press time, Nikola is trading at $15.36, a 2.20% gain over its previous close of $15.03.

Nikola Stock Falls after Cancelled Contract with Republic Services

In August, Nikola entered a deal to build 2,500 garbage trucks for solid waste collection company Republic Services. Shortly after Republic Services placed the order for the trucks, Nikola stock increased significantly. Reports revealed that Nikola was supposed to begin manufacturing the garbage trucks in 2023 and on-road testing scheduled for 2024.

Despite that Nikola has an ongoing battle with the US Securities and Exchange Commission (SEC), the company said that the contract cancellation was mutual. The company’s CEO Mark Russell revealed in a statement:

“This was the right decision for both companies given the resources and investments required. We support and respect Republic Services’ commitment to achieving environmentally responsible, sustainable solutions for their customers. Nikola remains laser-focused on delivering on our battery-electric and fuel-cell electric commercial truck programs, and the energy infrastructure to support them.”

Apart from the deal with Republic Services, General Motors (NYSE: GM) also terminated its $2 billion investment in Nikola Corp. Following the termination announcement in late-November, Nikola stock dropped almost 25% on the 30th of November.

Also on the 30th of November, Nikola signed a non-binding Memorandum of Understanding (MOU) with General Motors Company (NYSE: GM). Under the deal, General Motors will supply its Hydrotech fuel-cell system to Nikola. The two companies will work together to integrate the Hydrotech fuel-cell technology into Nikola’s commercial semi-trucks.

At the time, Nikola CEO expressed his satisfaction with the partnership with General Motors. Russell said that the companies would offer their resources, skills, and strengths towards the success of the deal.

TechCrunch noted in a report that beginning from 2021, Nikola will begin to deliver its Tre battery-electric semi-trucks in the US. Also, Nikola’s commercial hydrogen station should debut in the coming year. Furthermore, Nikola hopes to manufacture its fuel-cell-electric semi-trucks at its Arizona facility.

NKLA and RSG

Recently, Nikola has been recording both losses and gains in its stock. As the company generates profits upon announcement of new partnerships, NKLA has also been falling due to terminated contracts.

Over the past year, NKLA has climbed 25.64% and nearly 46% since the beginning of 2020. However, Nikola has lost 28.94% in the last three months. Over the past month, the company has decreased by about 50% and 11.59% in the last five days.

In addition, data by MarketWatch said that Nikola has a market capitalization of $6.46 billion.

On the other hand, Republic Services is currently trading at $95.01, the same as its previous close. With a $30.54 billion market value, the company has added 6.06% over the past year and 6% in its year-to-date record. Also, the solid waste collection company has gained 3.11% in the last three months. Despite the increases, the company has lost about 2% over the past month and 0.41% in the last five days.

Business News, Market News, News, Stocks, Wall Street
Ibukun Ogundare

Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.

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