Why Nikola sped up while Crocs got stung on Thursday

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TThe stock market saw another positive rebound on Thursday as investors got into the holiday mood a bit early. the Dow Jones Industrial Average (DJINDICES: ^ DJI) closed up 197 points to 35,950. S&P 500 (SNPINDEX: ^ GSPC) closed just short of a record, climbing 29 points to 4,726, while the Nasdaq Composite (NASDAQINDEX: ^ IXIC) gained 131 points to 15,653.

The end of the year often brings volatile moves for individual stocks, and it’s consistently those that have garnered a lot of attention or made big moves during the year that end up seeing the biggest swings. . Electric vehicle company Nicolas (NASDAQ: NKLA) hit the gas in a big way on Thursday, but the popular shoe maker crocs (NASDAQ: CROX) took a hell of a beating. Below you’ll find more information on what’s going on with the two companies.

Nikola delivers

Shares of Nikola rose nearly 18% on Thursday. The electric truck company made an announcement that gave investors optimism about the prospects for a rapid ramp-up in the future.

Image source: Nikola.

Nikola said Wednesday evening that he had made his first customer delivery. The milestone was a milestone for the company, which had seen considerable controversy amid skepticism about whether Nikola would ever be able to reach this point.

Additionally, Nikola’s announcement promised that there would be more deliveries to come. This is obviously something shareholders were hoping to see.

However, it is important to put today’s increase in the right context. This move was enough to push the share price above the level it traded when it came to a special purpose acquisition company that had yet to identify Nikola as its target. final to be floated on the stock market.

However, at just $ 11 a share, Nikola is still more than 80% below its all-time highs of early 2020. It may take many more deliveries to convince investors that the truckmaker has truly completed its comeback. .

A bad idea of ​​redemption?

In contrast, Crocs shares fell almost 12%. Investors have reacted negatively to the casual shoe company’s latest strategic move.

Crocs announced Thursday morning that it had agreed to buy the private shoe company Heydude for $ 2.5 billion. The deal will send $ 2.05 billion in cash to Heydude shareholders, of which $ 450 million in Crocs shares will go to Heydude founder / CEO Alessandro Rosano.

Crocs had some good things to say about the deal. The company views the acquisition as an immediate addition to revenue and earnings growth, and expects to see significant free cash flow as a result of the combination. Crocs hopes to reduce the leverage on its balance sheet as this liquidity arrives.

Still, investors seemed unhappy with the deal, possibly because Crocs will have to increase its debt in order to find the $ 2.05 billion in cash to pay Heydude. Some have also suggested that the price paid was just too high, with some dilution also coming from the equity portion of the repurchase price.

The stock pullback only returned part of the huge gains that Crocs shareholders enjoyed in 2021. Yet investors are already pretty comfortable with the shoemaker’s strategy, so some might wonder if Crocs overdo it rather than sticking with what’s already working.

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Dan Caplinger has no position in 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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