Nikola tumbles to record low on $100 million stock sale

Nu Ride

31/03/2023 16:11

March 31 (Reuters) - Shares of Nikola Corp  NKLA.O  hit
a record low on Friday after the electric-truck maker said it
plans to sell shares and raise $100 million, amid high
production costs.
    Nikola said late Thursday it will sell about 29.9 million
shares in public offering and 59.4 million shares to hedge fund
Antara Capital L.P., an existing holder of the company's
convertible bonds.
    Wall Street was concerned after Nikola's offering price of
$1.12 represented a 20% discount over its last close of $1.40 on
Thursday.
    Shares of the EV startup, based in Phoenix, Arizona, were
down as much as 17.8% at $1.15 in early trading, its biggest
one-day decline since January 2021.
    
    "Despite the $100 million cash injection, management still
has a lot of work to do to balance cash burn against its
existing cash," said BTIG analyst Gregory Lewis, and downgraded
the stock to "neutral" from "buy".
    The company said it has $123 million in cash and $85 million
in restricted cash as of March 28.
    Nikola, like other smaller EV firms, has been struggling to
ramp up production at a time when demand has stalled amid high
borrowing costs, driven by higher interest rates. 
    Last year, the company had said it might sell shares to
raise up to $400 million.
    In February, the company had said the factors hitting demand
for its battery-powered trucks were not expected to ease in the
near future, after it delivered fewer than a sixth of the
battery-powered trucks it made in the fourth quarter.
    Other EV stocks, including Tesla Inc  TSLA.O , Rivian
Automotive Inc  RIVN.O , Lordstown Motors Corp  RIDE.O  and
Lucid Group Inc  LCID.O , are all up between 2% and 6%.

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Nikola falls to lowest since going public    https://tmsnrt.rs/3nuOrFn
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 (Reporting by Tiyashi Datta in Bengaluru and Lance Tupper in
New York; Editing by Pooja Desai)
 ((tiyashi.datta@thomsonreuters.com;))