On Friday, electric vehicle startups Nikola and Lordstown Motors were poised to continue a ferocious share surge that had placed the cash-strapped businesses on course for substantial weekly gains.

Since there has been no clear news or catalyst for the companies during the winning streak, several analysts and traders have speculated that the heavily shorted stocks may be under pressure.

Refinitiv reports that the short interest for Nikola, which has more than doubled in value this week, is 15.7%. Other notable gainers hold short interests of 15.2% and 24.3%, respectively, including Lordstown and Workhorse Group.

Another heavily shorted company, used vehicle reseller Carvana, has had huge increases this week that have increased its value by roughly $1.38 billion. The market valuation of the EV startups, meanwhile, has increased by more than $500 million.

The surge has coincided with a record winning streak for Tesla, the industry leader in electric vehicles (EVs), whose stock movement frequently affects other businesses in the industry.

Nikola was the fifth-most traded U.S. company by retail investors on Thursday, according to the J.P. Morgan retail flows tracker, indicating that individual investors have been a significant supporter of the share price increase.

Among the top 20 equities traded by retail investors were Carvana and Faraday Future, an electric vehicle startup with a valuation of little over $500 million.

The surge could be able to prevent Nikola from getting delisted. Late in May, Nasdaq sent the company a warning because its share price had fallen below the $1 minimum limit for the previous 30 days.

Before the bell on Friday, Nikola shares were 20% higher at $1.65, on track to stay above the minimum level for a third straight day. If the stock trades above $1 for 10 straight business days, it will once again be in conformity with Nasdaq’s standards.

The 12-month future price-to-sales ratio for Nikola’s stock is 3.21 as opposed to 1.38 for Workhorse and 7.23 for Tesla.

Even then, the EV companies still face a number of difficulties, as shown by the year-to-date stock price reductions of 35% and 75% at Nikola and Lordstown, respectively.

Their access to capital has been hampered by rising interest rates and high inflation levels at a time when efforts to increase production are depleting the companies’ cash reserves.

The EV manufacturer Lordstown is also embroiled in a contentious battle with investor Foxconn, which has threatened to scuttle a vital $170 million funding.

(Adapted from MarketScreener.com)

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