Worthington’s muted gain a bearish signal after Nikola surge

Nikola Corp.’s stratospheric rise has led the unprofitable electric truck maker on Tuesday to surpass the market valuation of century-old stalwart Ford Motor Co., but a more muted rally in a key shareholder suggests shares may have climbed too far, too fast.

After investing $2 million in the startup in 2015, metals manufacturer Worthington Industries Inc. now holds more than 19 million shares following Nikola’s reverse merger last week with a blank-check company, VectoIQ Acquisition Corp. While Nikola more than doubled by its third day of trading, Worthington’s stock had climbed just 12% through Monday.

That could be signaling some doubt that Nikola’s gains will hold for the six months before Worthington is allowed to sell shares. With Nikola’s stock jumping to $73.27 on Monday from $35.97 on Friday, the value of Worthington’s stake also doubled and was worth close to $1.4 billion as of Monday’s close, at least on paper.

One thing thing to consider: Worthington would be subject to about a 25% capital gains tax if it sells its Nikola position, according to KeyBanc analyst Philip Gibbs. Last week he called the investment an “unorthodox source of potential liquidity.” In an email to Bloomberg on Tuesday, Gibbs said he estimated the value of Worthington’s investment at about $200 to $300 million, before taxes. He rates Worthington the equivalent of a hold.

A spokeswoman for Columbus, Ohio based Worthington said the company has been repaid the initial capital investment, so its cost basis is zero, but she didn’t immediately respond to questions on the value of its stake. Another shareholder, CNH Industrial NV owns roughly 7% of the electric and hydrogen fuel-cell truck maker, CNH stock gained 14% over the last two trading days.

Meanwhile, Phoenix-based Nikola shares were volatile on Tuesday in New York. They shook off a premarket gain to sink as much 22% before resuming their ascent to a record. They traded up 7.4% to $78.71 at 10:54 a.m. Worthington gained 0.7%.