The Most Dangerous Stock In The World

Dangers are lurking around every corner in the realm of investment.

Between historically bad unemployment.

To historically bad economic news.

To business closures leading to bankruptcies.

To people not paying their bills because they’re running out of money due to the mass job losses.

And on and on.

This is just in the realm of investment and finance.

Coronavirus cases are increasing rapidly in the US and abroad which is putting an even bigger strain on all this.

Yet the market keeps going up.

It makes no sense.

As of this writing the market is valued at its 4th highest level ever.

The only other times the market was trading at higher valuations was…

  • 1929 before The Great Depression
  • Early 2000’s Tech Bubble
  • Earlier this year before the coronavirus pandemic caused the market to crash in March.

That’s it in the history of the United States stock market.

EDITORS NOTE – The metric shown in the chart above is known as the Shiller P/E or the Cyclically Adjusted P/E Ratio – CAPE for short. This shows the markets valuation over time by stripping out inflation.

The US stock market is valued higher now than at any other point in history outside of the 3 times shown above… But during those sky-high valuations we were dealing with great economies, output, and productivity.

Today, we’re dealing with one of the worst economic situations in our country’s history.

It makes no sense.

Rampant speculation is happening at levels that maybe have only been surpassed in the lead up to The Great Depression.

As a few examples of what’s going on today…

  • Hertz declared bankruptcy and then its stock rose 888% in 10 days.
  • Wirecard got caught in a massive fraud scandal, its former CEO is in jail, it’s going through bankruptcy and legal proceedings which caused its stock to drop 97% in 8… And then it shares rose 150% in a day.
  • And many companies working to create potential vaccines for the coronavirus are skyrocketing on news not that they’re getting closer to a vaccine.  But just that they received more funding to further research a vaccine.

The markets gone from highly overvalued in February.

To a massive crash in March.

To a rapid recovery in April, May, and early June.

To now massive speculation.

It makes no sense.

To further illustrate this craziness, I want to introduce you to The Most Dangerous Stock In The World

Why Nikola Is The Most Dangerous Stock In The World

Most of the time IPO stands for Initial Public Offering… The day a companies shares become publicly available to buy or sell on a stock market.

I avoid investing in IPO’s for many reasons that fall outside the scope of this article.  

But there’s another investing acronym for IPO that perfectly boils down the main reason I avoid investing in IPO’s…

It’s Probably Overpriced.

Meaning most IPO’s are massively overpriced when the shares become available on the stock market.

In times of speculation this gets even worse as IPO valuations get even higher.

This is where Nikola Corp (NKLA) comes into play.

The company was founded in 2014 and IPO’d on June 4th, 2020. 

Nikola is a $16 billion market cap development stage “designer and manufacturer of battery-electric and hydrogen-electric vehicles.

Nikola’s goalsare to develop, design, and manufacture electric vehicles in the commercial trucking space.  And by doing this it will take on Tesla, Amazon, and other giants in this industry.

I highlighted the key words above in bold from the company’s description because they’re the only things that matter.

When you see the term development stage when it comes to a public stock… It means the company has no operations now.  This also usually means the company doesn’t earn any revenue.

And Nikola has neither as of this writing.

None.

Here’s a screenshot of its data on Morningstar.

Here’s another screenshot from its website.

It’s not 100% true though that Nikola has no revenue.

It earned revenue in the past… Just not from its current or planned future operations.

Nikola earned $500,000 in revenue in 2019 from installing small scale solar projects.

And on a total of $500,000 in revenue over the life of its company it produced a total of $170.6 million in net profit losses since 2016.

And yet the current market value is $16 billion.

Buying Nikola shares certainly isn’t investing… It’s not even speculation… At this point people buying Nikola stock are 100% gambling.

Nikola perfectly illustrates the crazy times we’re living in now.

Could Nikola become the next Tesla, Uber, or Airbnb?

Yes.  A tiny microscopic chance.

There’s a far higher likelihood of a complete implosion here.

Nikola isn’t just a dangerous stock.

Its one of the most dangerous stocks you can buy in the world today.

And one of the most dangerous stocks I’ve seen in the 13+ years I’ve been investing.

A company with $0 revenue and $170.6 million in total losses in its current operations is valued at $16 billion on the market.

It makes no sense.  But it also perfectly illustrates the crazy times we’re living in today.

And its stock also justifies why many think the market is a casino.

Because right now, it looks like one.

Click the links below to see the stocks we recommend helping Depression Proof Your Portfolio.

P.S. Even though I view Nikola as pure gambling and an extremely dangerous stock I don’t recommend shorting it… There’s far too much speculation going on in the market right now to short this or any other company.

Disclosure – Jason Rivera is a 13+ year veteran value investor who now spends much of his time helping other investors earn higher than average investment returns safely. He does not have any holdings in any securities mentioned above and the article expresses his own opinions. He has no business relationship with any company mentioned above.

0 Shares:
You May Also Like