Nikola’s Earnings Don’t Matter. There Are Bigger Issues for the Stock.

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A Nikola Badger prototype.

Courtesy Nikola

Nikola reported relatively uneventful earnings late Monday. That doesn’t mean there isn’t a lot going on at the alternative-fuel heavy-duty trucking start-up. The company updated investors about growth plans as well as some regulatory woes arising from a short seller’s report that alleges Nikola management misled investors, claims that it denies.

Earnings, in fact, were probably the least important portion of the report and subsequent earnings call. The company is still in its presales phase. Significant revenue isn’t expected for years to come.

Nikola (ticker: NKLA) did tell investors the prototype of its electric truck, being built by a partner in Germany, will be completed by year-end 2020. What’s more, its new manufacturing facility going up in Arizona is on schedule.

Both tidbits are good news. The company also disclosed in filings that Nikola, along with founder and former board chair Trevor Milton, received subpoenas from the Securities and Exchange Commission in what the company described as “fact-finding inquiry.”

The subpoena request comes after the short seller’s negative research report. The company and Milton also received a grand jury subpoena from the New York County district attorney’s office. The company said it’s cooperating with governmental requests, but additional details were thin.

That is bigger news, but it’s only a confirmation of what investors already expected. At least earnings were uneventful. That’s additional good news for weary investors. The stock has been very volatile over recent weeks, jumping after a potential partnership with General Motors (GM), only to fall after the short seller’s claims.

“At this point it’s about regaining investor credibility one step at a time with last night another building block on that path,” wrote Wedbush analyst Dan Ives in a Tuesday research report. “Overall we still believe the company’s EV and hydrogen fuel cell ambitions are attainable in the semi-truck market, although we have serious concerns that the execution and timing of these ambitious goals stay on track over the coming years.”

Ives is on the sidelines, rating shares Sell. His price target is $15 a share, below where the stock is currently trading. J.P. Morgan analyst Paul Coster is more optimistic, rating shares Buy. His price target is $40.

Nikola’s quarterly loss was smaller than Coster expected, but the figure amount to “mild positives that won’t matter to investors at present,” he wrote. He is waiting for the company to announce a fueling station partnership soon. Nikola plans to build hydrogen filling stations selling the trucks as well as fuel.

The pending GM deal also looms large Nikola. GM was to take an 11% stake in Nikola in return for manufacturing and engineering support. GM was going to manufacture the Nikola Badger, the company’s light-duty truck, which would eventually be available in battery and fuel-cell options. “Nikola appears keen on proceeding with the GM deal,” writes Coster. He sounds less certain the Badger will be a go.

RBC analyst Joseph Spak has the same sense the Badger might be scrapped. He wasn’t moved by the quarterly update, either. “Much happened, little changed,” wrote Spak in a Monday research report following earnings. He rates shares the equivalent of Hold and has a $19 price target.

Deutsche Bank’s Emmanuel Rosner and Cowen’s Jeffrey Osborne are the other two analysts covering Nikola. Rosner echoes Spak, arguing the company’s third-quarter numbers won’t change investor sentiment. He rates shares Hold and has a $26 price target.

Osborne writes that the company “showed minimal new news” Monday. He rates shares Buy, but cut his price target to $47 a share, down from $79. He still has the highest price target on the Street.

Nikola stock is down 2.8%, at $18.10, in recent trading. The Dow Jones Industrial Average is up 0.5%. The S&P 500 is down 0.4%.

Write to Al Root at allen.root@dowjones.com