According to media outlets, Nikola, the once much vaunted green energy company, which planned to build hydrogen-electric trucks, is now planning to file for bankruptcy.
Well another one bites the dust. Remember how two years ago everything was about the green transition? Maybe there will be a green transition maybe there won’t but we should not underestimate how difficult it is for new things to grow.
Actually new things that do grow might be profitable from the start and then grow from there. The auto industry requires huge amounts of upfront capital investment just to work (not to mention you still might not end up with a viable product). So it’s a lot more difficult than say Google or Facebook in terms of achieving critical scale.
I think this is a somber lesson for investors, most highflying stories won’t work out and each bankruptcy is a lesson to learn not to chase after hot stories. In fact, less hot but stable stories might make the real money while hot stories get investors fried.
For every Tesla stock that goes up 10X, there’s probably 100 or 1000 other “creative” companies that don’t do so well.
Should they be funded? Sure, but maybe through VCs and PEs in a diversified manner, Mom and Pops shouldn’t put large amounts of retirement savings into these issues.
Just my two cents.