Why Nikola Stock Popped Today

What happened

Shares of electric and fuel-cell-powered truck company Nikola (NKLA 8.98%) soared 11% through 12:15 p.m. ET this afternoon after Barron’s reported that the California State Teachers’ Retirement System (CalSTRS, the second-largest pension fund in the U.S.) has increased its investment in the EV company.    

So what

In the second quarter of 2023, CalSTRS added 221,367 Nikola shares to its holdings, a 52% increase that brings its total investment in the EV maker to 641,827 shares.

This shouldn’t necessarily be taken as a vote of confidence in Nikola in particular, though. Turns out, CalSTRS also raised its investment in Rivian Automotive (RIVN 2.52%) by 64.5%, and in Lucid Group (LCID 1.88%) by nearly 79%.

Viewed from that perspective, it looks more like CalSTRS is placing a large number of bets on electric vehicles in general, rather than one specific big bet on Nikola. In fact, you could actually argue that CalSTRS’ investments suggest it’s relatively less optimistic about Nikola than about Rivian and Lucid.

Now what

Then again, I’m not 100% convinced that anyone should be taking cues from CalSTRS on where to invest their own retirement savings in the first place. Viewed as a group, Nikola, Lucid, and Rivian are deeply unprofitable automakers, having lost $845 million, $2.5 billion and $6 billion, respectively, over the last 12 months. For a $320 billion retirement fund like CalSTRS, it may be worthwhile placing several small bets on troubled automakers in hopes one of them will take off.  

For investors of more modest means, though, it’s probably a better idea to invest in companies that actually earn a profit.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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