NKLA Stock Price: Nikola Corporation crashes on reduced GM deal, bargain-seekers may jump in

This electric car has run out of battery – at least in the short term. Nikola Corporation (NASDAQ: NKLA) has suffered a dramatic downfall of around 27% on Monday after its deal with General Motors (NYSE: GM) was substantially reduced. The young EV-maker and the legacy automobile giant announced that their partnership would be scaled down. 

Nikola is set to incorporate GM's Hydrotec fuel-cell system in two of its semi-truck vehicles and will also explore utilizing the Ultium battery in joint projects. 

However, the announcement tells a bigger story by what is not included in it. GM refrained from helping Nikola in producing the latter's high profile Badger pick truck. That will result in Nikola refunding order deposits for the vehicle – an immediate financial blow. 

The high price tag that NKLA had was partially based on hopes that GM would buy a stake in the firm. The dream of many startups – whether in the software industry or the EV one – is to sell out to a bigger player. Such an option is off the cards. 

Bulls can blame the Hindenburg report – a scathing document by a short-seller that hit NKLA hard and cooled enthusiasm from other investors. 

Will bargain seekers jump in? The ongoing collaboration, even if small, may trigger some interest in shares. The Utah-based company could still work with other players in the automobile sector, from Ford to Tesla. 

Another reason for clinging to hopes comes from the technical side.

NKLA stock news

NASDAQ: NKLA's downfall has sent it towards the stubborn support line of $18.50, which served as a floor under the stock in the past few months and as late as mid-November. If shares weather the storm, they could rise and accelerate later on. If not, the line in the sand is $10.35, the flat line seen early in the year. 

To move higher, NKLA would have to first move above the late October peak of $22.54.