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Posted October 22, 2020

Scott Stewart

By Scott Stewart

$10B Company with No Product, No Sales, No Revenue

Hi folks, and welcome to todays Rude Awakening

Were looking at another slightly down day.

Once again, we are definitely in a downtrend in this bull market.

7 Days in a Row Down

Today marks the seventh day in a row that the market is trending lower than the day before.

Yesterday, we actually came down and touched the 50day MA in the S&P.

Its proven to be a support level still, as we were able to bounce back above it.

Like I keep saying, theres no real catalyst in the market right now, other than that potential (but unlikely) stimulus deal.

Were in a wait and see mode, holding out for definitive directional bias in this market.

But, as you know, confused markets are still tradable!

Whats the New, Shiny Sector?

The sector well focus on today is the latest bright and shiny object investors are focused on.

Every once in a while, theres a new piece of tech or a new product division that takes grasp of the markets attention.

A couple years ago it was the pot stock sector

We had $2 and $3 billion valuations on companies that had $80k in revenue and $0 profits.

Then, we had the non-meat stocks that came out with their meat substitutes, and the market went crazy over em. Beyond Meat was an example of this one an $11 billion company with NO profits.

5G stocks are hot right now, without any real earnings upside there. And yet, the stock prices are ripping to the upside.

The big one well talk about today is the EV (electric vehicles) sector.

The grandaddy of EV stocks is, of course, Tesla. Theyre a $400 billion company showing only $380 mill in earnings. Thats a low margin, but heres where it gets even crazier: their profits only exist due to government subsidies!

Take those tax credits out of the equation, and theyre another giant with no profits to show for it.

But, at least Tesla makes and sells actual products their cars. You see them on the streets, you can buy them yourself. Theyre real.

Were going to look at a company in the same sector but one with a very different situation.

$10 Billion Company with NO Product?!?

Nikola Corporation (NKLA) is in the same market as Tesla. Theyre a company worth $10 billion.

And, theyre a company that sells absolutely nothing

Nikola has no product on the market. Theyve faked videos demonstrating their hydrogen-powered car! But in the video they show, the car is simply rolling down a hill propelled by gravity, rather than an actual engine of any kind.

The companys founder, Trevor Milton, is a doozy, too.

He recently stepped down amid accusations of fraud and investor deceit. Not to mention some accusations of sexual assault coming to light.

And the tech behind the EV companys main product? Not even his IP. He apparently purchased it off someone else.

Not that its created any working prototypes anyway

It all comes back to the point, though, markets do this.

Nikola is a multibillion-dollar company that literally sells NOTHING!

So, of course, they give us a great opportunity for a bearish trade.

Thats exactly what we set up today in the Pro version of our service.

Were working behind the scenes to get the Rude Pro out for your availability -- and its coming soon. Were aiming for next week, so look out for that.

But thats it for today!

Have a great rest of your trading day, folks.

Well talk again tomorrow

Regards,

Scott Stewart

Scott Stewart

Editor, Rude Awakening

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