Nikola shares hit record low on plan to raise $100M

Shares of Nikola 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 a public offering and 59.4 million shares to hedge fund Antara Capital, 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, were down as much as 18% at $1.15, 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.”

A Nikola truck
EV startup Nikola is struggling with high production costs.

The company said it has $123 million in cash and $85 million in restricted cash as of Tuesday.

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, Rivian Automotive, Lordstown Motors, and Lucid Group, are all up between 2% and 6%.

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