People loved Nikola but not its warrants

In reality, of course there are better and worse deals out there, but the rule keeps me from thinking I'm smarter than the market and being blind to risks or problems that others have seen.

(Also they are partially owned by CNH IIRC, so that seems easy to do).

But you can't exactly go down to the local credit union and apply for a twenty billion dollar loan. So the only way to build something is to hype the nothing that you currently have in order to get investors to give you a ton of money so you can actually build something.

It's like the people confused about Tesla's current share price in the middle of a pandemic. But it's the response to the pandemic which has given them the greatest boon they could have asked for -- very low interest rates. That causes investors to borrow money to invest, which is what's holding up stock prices in general. But on top of that they're selling a product with a higher up-front cost and lower operating costs, so lower interest rates make for lower car payments make for more customers. The company itself still has a lot of outstanding debt which can now be refinanced, and lower interest rates make it cheaper for them to borrow even more to continue expanding.

Nikola benefits from a lot of that too, though you can't really gain customers through low interest car loans before you have a product. The issue for Nikola is that "fake it 'till you make it" only works if you eventually make it. If they don't generate enough hype to raise as much capital as they need to actually bring a viable product to market before the bottom falls out, poof.

But who knows? Maybe a big European or Japanese carmaker (many of them have mentioned their desire to pursue H2/fuel cells cars) decides to acquire them to speed up the transition, in which case, even if it's all vaporware, the stock might be worth something.

Nikola is hard to short right now primarily for two reasons:

1. It's a brand new company (IPO'd last month) with a large number of non-institutional share holders, who are not likely to lend out their shares.

2. It seems ridiculously overvalued (even after falling a fair bit it still has a $13B market cap despite having developed no products!), leading to _huge_ demand from shorts.

If you want to sell the stock short, you have to borrow it. If there's nobody who can loan it to you, you can't borrow it so you can't sell it short. Technically, you (or your broker) have to know where you'll borrow the stock before you're allowed to sell it short. In trader parlance this is called a "locate".

When supply of loanable stock is low and short interest is high, the rate gets expensive. For example, this happens on stock holdings with lock-up provisions that prohibit long holders to loan or sell stock until a particular date. Among other reasons, this may happen after an employee stock option exercise, or after an IPO.

There's a process called "rehypothecation" where a broker can loan shares from long Client A to short-selling Client B, charging a rate to Client B and paying a cut of it to Client A. They can also loan shares to other firms.

The borrow rate is independent of the stock price. If the stock rallies, short sellers may add to their position, or they may blow out. If the stock sells off, short sellers may take profits, or they may pile in and ride all the way down.

In addition to stock loan, there is a swaps market and a rev/con market. So there are various ways for the market to absorb demand for borrow. Like, if Bank ABC is long a ton of shares and the rest of the street is short, Bank ABC can sell put on a rev/con, which will imply the short rate despite the bank actually having no need to locate and borrow shares. This kind of action naturally sets the price for borrow. No regulators involved.