Shares of hydrogen and battery-electric truck maker Nikola ( NKLA -8.42%) plunged today and were trading 29% lower through 11:30 a.m. ET. Friday, according to information offered by S&P Global Market Intelligence
The electrical car (EV) stock hardly made it past the $1 mark previously this month, however is now exchanging hands for almost $0.76 per share since this writing. Nikola has actually regularly counted on stocks and convertible bonds to raise funds over the previous number of years approximately. To financiers’ irritation, the business’s doing it– yet once again.
Money troubles continue to afflict Nikola
Today, Nikola stated it will provide stock worth $100 million along with raise another $200 million through convertible senior notes. While a stock sale waters down the wealth of existing investors by default considering that their stake in the business falls, a convertible senior note is a double whammy. That’s because senior convertible notes are a kind of convertible bond where holders can choose to transform their notes into Nikola shares. If and when they do, it’ll even more water down the wealth of existing Nikola investors.
Why is Nikola regularly releasing stock and bonds? The business is facing a money crunch even as it attempts to construct trucks and meet orders. Nikola will utilize the cash from its newest round of stock and bond problems for working capital and other business requirements.
Can Nikola meet orders for hydrogen trucks?
Nikola reported its third-quarter revenues in November, and although it got more orders, it likewise published a broader loss. Since Nov. 2, Nikola had 277 non-binding orders from 35 clients for its Tre hydrogen fuel-cell electrical trucks, however all of that buildout will need a great deal of cash.
Nikola likewise makes battery-electric cars (BEVs), however its strategies strike the wall after the business willingly remembered 209 durable Tre BEVs trucks in August since of defective battery packs and momentarily stalled the sale of brand-new BEVs. Nikola will now change the packs and anticipates to begin BEV shipment once again in early 2024, however it will likewise sustain almost $62 million in expenses for the recall and repair work.
That’s a quite expensive affair for a business that’s currently knee-deep in losses. In reality, Nikola created unfavorable overall income of $1.7 million in Q3 as it offered just 3 BEVs however redeemed 7 after canceling some dealership contracts. Its bottom line expanded to $425.8 million in the quarter from around $236 million in Q3 2022.
Long story short, Nikola might be getting truck orders however it is presently in a hard area economically, and today offered financiers yet another factor to offer the stock.