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December 1st, 2020 | 10:14 CET

Royal Helium, Xiaomi, Nikola - Everything off with hydrogen?

  • Energie
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What a shock! Instead of the liberation blow comes the disillusionment for the Company Nikola, which has been under the accusation of fraud for months and wants to build trucks with fuel cell technology. Due to this news, the whole industry corrected yesterday. Hydrogen technology is a definite future trend. However, the partly overambitious turnover and profit targets for the next years have to be confirmed first. Many things remind us of the new market at the turn of the millennium.

time to read: 3 minutes | Author: Stefan Feulner
ISIN: CA78029U2056 , KYG9830T1067 , US6541101050

Table of contents:

    What happened?

    It is not the deal Nikola had planned with the largest car manufacturer in the United States, General Motors. Initially, the giant wanted to take an 11% stake in Nikola. The bottom line was now a non-binding declaration of intent that General Motors would supply fuel cells to Nikola. Also, it will not affect the construction of the planned electric pick-up truck, Nikola Badger, which the two parties had created.

    Bloodbath threatens

    Anyone who is currently toying with the idea that Nikola stock is a buy after slipping over 80% could be disappointed in the next few weeks. The lock-up period ends on December 7th. From this date on, other insiders, in addition to the resigned ex-Chairman Milton, are allowed to sell their shares. A total of 161 million papers could thus fly onto the market. After the events of the last months, ex-Chief Milton alone is unlikely to necessarily hold on to the Nikola share in the long term.

    Development at the beginning

    The development of the hydrogen industry is already well advanced on the stock exchange. Helium, which is the most abundant element in the universe besides hydrogen, has been living a shadowy existence. However, if you look at the areas of application in which this noble gas is needed, it is in no way inferior to its big brother. In recent years, the demand for helium in the health care sector as well as in manufacturing has risen sharply.

    Stock market stars of tomorrow

    As at the beginning of a trend, the affiliated companies are only gradually listed on the stock exchange. At the moment, there are only a few helium companies that dare to go public. The Canadian Company Royal Helium focuses on the exploration and development of this noble gas. The gas cannot be produced artificially and is extracted from deposits in the ground. Royal Helium has access to approximately 400,000 hectares of prospective helium land in southern Saskatchewan, Canada, making it one of the largest helium lease Companies in North America.

    Major study planned

    Mid last month it was announced that an engineering study for a large-scale industrial gas generation plant, based in Saskatchewan, was being initiated by Royal Helium and is being conducted by the Saskatchewan Research Council. The study is Royal's first step in determining the economic potential of a large scale facility to separate and monetize the gas streams associated with helium production wells in Saskatchewan. Helium is produced there along with large volumes of other inert gases for which there is a massive global market. According to Royal Helium Chairman Andrew Davidson, the economics of helium production are considerable in themselves. However, the commercialization of other gases could significantly increase net cash flow.

    Placement flushes money into the till

    Yesterday, the ambitious Company, led by Cormark Securities Inc., announced the execution of a private placement. Royal Helium will receive at least CAD 4 million and up to CAD 6 million if an over-allotment option is exercised. Net proceeds from the offering will be used to fund helium exploration drilling on the Company's concessions in southern Saskatchewan, and for general corporate purposes. The current share price is CAD 0.27. Recent analyst opinion is for a target price of CAD 0.80.

    Give me the medal

    According to the analyst firm Gartner, the Chinese Xiaomi group sold more smartphones than Apple in the third quarter. As a result, the former top seller is falling off the medal podium. With 44.4 million devices, Xiaomi is now in third place and has captured a market share of 12.1%. Samsung Electronics naturally remains the industry leader. The South Koreans own 22% of the cake. Despite the US sanctions, Huawei remains on a silver course. Overall, according to Gartner, almost 6% fewer smartphones were sold in the third quarter than in the same period last year. Sales in the two previous quarters were also significantly worse than in the same period in 2019.

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    Der Autor

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author