Nikola Inc. shares closed at an all-time low Thursday, and the maker of electric and fuel-cell vehicles expects to sell stock at a 20% discount to that price.
Nikola announced Thursday afternoon that it intended to sell $100 million in shares to the public and another $100 million to an unnamed investor in a direct offering. Later Thursday, however, the company said that it would instead raise $100 million total, splitting the shares between the public and the unnamed investor, and charging $1.12 per share.
closed Thursday at an all-time low of $1.40, and moved to $1.30 a share in after-hours trading, following the announcement of the initial version of the deal. Nikola announced the price of the deal and the changed terms after the extended session ended.
Nikola reported that it expects to sell about 29.9 million shares to the public at the offering price, and about 59.4 million shares in the private offering, totaling roughly $100 million. The company could offer about 4.5 million more shares through its underwriter, Citigroup Inc.
Nikola began producing an electric freight vehicle in 2022, producing 133 of the vehicles in the fourth quarter, when its revenue disappointed investors. The company intends to deliver another 250 to 350 of those trucks in 2023, executive projected in February, and begin producing its hydrogen fuel-powered version in the fourth quarter, when executives intend to deliver 125 to 150 of those trucks.
The company reported a net loss of $784 million for the year, and cash and short-term investments of about $244 million when 2022 ended. Analysts on average expect the company to report a net loss of about $155 million for the first quarter, which ends this week.
Nikola’s founder, Trevor Milton, was convicted of securities fraud last year for promises he made about the company’s work on hydrogen-fueled heavy trucks. Milton’s replacement as CEO lasted about three years before leaving the company at the beginning 0f 2023. Nikola’s chief financial officer announced her departure earlier this week, and was replaced by the company’s controller.
Shares have plunged 87.4% in the past 12 months and 35.2% so far this year, as the S&P 500 index
has declined 12.5% and gained 4.9% in those periods respectively.
Nikola Corporation (NASDAQ: NKLA) recently announced that it will sell its common stock at a 20% discount, or a record low price, to the public. The company has set the proposed offering price at $20 per share. This comes after reports that a major shareholder is looking to liquidate the company’s stock.
This announcement comes amidst a tumultuous period for Nikola Corporation. The company is facing multiple investigations from the Securities and Exchange Commission (SEC) and Department of Justice (DOJ), in addition to multiple class-action lawsuits from investors. Further, the company also recently experienced a series of missteps that led to a dramatic drop in its stock price.
In recent months, Nikola Corporation has taken steps to try and restore investor confidence. The company announced plans to reduce its operating costs and focus on developing its core products and services. The company has also tapped BP plc, a global energy and petrochemical company, to help develop and build its hydrogen fuel cell technology.
Despite the hope that these steps will help the company’s financials, the stock market has not been kind to the company. The stock has dropped nearly 50% since its highs of just a few months ago. As a result, the company is looking to capitalize on a possible opportunity to increase liquidity in the short-term.
It remains to be seen whether this discounted stock offering will be beneficial for Nikola Corporation and its investors. The company does appear to be shifting its strategic focus to developing core products and services and away from non-core ones. However, it is too early to tell what kind of effect this move will have on the overall stock market sentiment towards the company.
For now, investors will have to wait and see what effect this move will have on the company and whether or not it will help to bolster its stock.