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Nikola (NASDAQ: NKLA) executed a 1-for-30 reverse stock split on June 25. That unusual move was aimed at preventing the electric semi-truck maker's stock from being delisted from the Nasdaq for slipping below the $1 limit.

Nikola's stock now trades at about $9 but is still far below its split-adjusted high of $2,391.90 on June 9, 2020. Should investors buy this out-of-favor electric-vehicle (EV) stock while it's below $10 or invest in one of its better-run industry peers instead?

Image source: Nikola.

Why did Nikola's stock plummet more than 99%?

Nikola went public by merging with a special purpose acquisition company (SPAC) on June 3, 2020. It attracted a lot of attention because it was carving out a niche in battery-powered (BEV) and hydrogen-powered (FCEV) electric semi-trucks.

But like many of its SPAC-backed peers, Nikola set some grandiose growth targets and missed them by a few hundred miles. Here's how badly the company missed its own delivery, revenue, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) estimates over the past three years.

The company mainly blamed its dismal production rates on supply-chain constraints but clearly exaggerated its growth potential. Shortly after its public debut, it was hit by a damning short-seller report and multiple media investigations. Its top investor General Motors subsequently scrapped its plans to manufacture Nikola's Badger pickup.

Nikola's founder and former CEO Trevor Milton, who handed the reins over to Mark Russell right before its public debut, was also convicted of securities and wire fraud in 2022. Russell stepped down in late 2022, while his successor, Michael Lohscheller, only lasted for about a year before resigning. Nikola is now led by Steve Girsky, a former General Motors executive who owned the SPAC that Nikola initially merged with.

Under Milton's three successors, Nikola struggled to ramp up its production, overcome a BEV recall caused by battery fires in 2023, rein in its expenses, and generate enough liquidity to stay solvent. Its share count has risen 258% over the past four years as it tried to raise more cash through fresh stock offerings. However, it ended the first quarter of 2024 with just $378 million in cash and equivalents -- compared to analysts' expectations for a negative adjusted EBITDA of $371 million this year.

Has Nikola hit rock bottom?

Nikola has admittedly taken some steps in the right direction under Steve Girksy. It delivered 112 FCEVs in the first half of 2024 as it continues to fix the battery issues in its recalled BEVs. During a conference call in February, Girsky predicted the company could generate "$150 million to $170 million" in total truck revenue for the year as it ramped up its FCEV shipments and rebooted its BEV business.

Analysts are less optimistic but still believe the company can generate $127 million in revenue for the full year. With an enterprise value of $431 million, Nikola only trades at 3x that estimate. By comparison, Rivian and Tesla trade at 2x and 8x this year's sales, respectively.

Therefore, Nikola's stock isn't really expensive, even though it diluted its shares over the past four years. Its debt-to-equity ratio of 0.96 also suggests it has room to take on more debt -- but it could be difficult to do so with favorable interest rates.

Could Nikola be a deep-value play?

From 2024 to 2026, analysts believe Nikola can grow its revenue at a whopping compound annual growth rate (CAGR) of 199% to $1.13 billion as it scales up its business, ships more vehicles, and builds more hydrogen charging stations with its partner Voltera. They also expect the company to narrow its adjusted EBITDA loss to $170 million by the final year.

We should be skeptical of those estimates, considering how many times Nikola overpromised and underdelivered. It could also face intense competition from Tesla's new battery-powered Semi over the next few years.

If Nikola can overcome its near-term challenges, however, it might be a deep-value play at these prices. I'd personally prefer to bet on Rivian's potential turnaround than buy Nikola, but it could still be a high-risk, high-reward EV play for investors who aren't afraid to lose all their money.

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool recommends General Motors and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.