By
Steve Muchoki
October 25th, 2023
Like many other automakers, Nikola has been struggling to stay afloat in the sinking water of macroeconomic constraints.
America’s leading manufacturer of wavy-duty commercial battery-electric vehicles Nikola Corporation (NASDAQ: NKLA), is planning to generate $100 million by offering shares of its common stock. The company announced on March 30 that it had started an SEC-registered underwritten public offering. Following news on the common stock shares offering, Nikola dropped over 7% in extended trading after closing down 6.67%.
Nikola Announces Secondary Common Stock Offering
According to the announcement, Nikola explained that the plan to raise capital is in two parts, beginning with the secondary offering of common stock. Under this deal, investment banking group Citigroup (NYSE: C) is acting as the sole book-running manager. The bank also has the option to buy more shares worth $15 million. In addition, the company has also agreed on a forward stock purchase with an investor. That means the private investor will purchase enough stock to reach $100 million if the stock offering raises less than $100 million. Either way, Nikola is assured of securing a total of $100 million via the common stock offering or input of the unnamed private investor.
Stating the intended use for the proceeds of the common stock offering, Nikola said its funds would go into working capital.
“Nikola currently intends to use the net proceeds from the public offering and the concurrent registered direct offering for working capital and other general corporate purposes.
Fingers are crossed that the common stock offering will help Nikola to recover from losses. The company has consistently been experiencing losses over the past year. Compiled data shows that the vehicle maker has dropped almost 87% in the last twelve months and has shed over 35% since the beginning of January. In addition, Nikola has plunged 41.42% in the last three months and 33.65% over the past month. In the last five days, NKLA has reduced by 0.71%.
Nikola’s Struggles
Like many other automakers, Nikola has been struggling to stay afloat in the sinking water of macroeconomic constraints. It had a disappointing 2022 after missing its EV goals by significant margins. It delivered less than it targeted in the year. While Nikola planned 500 vehicles for its 2022 production line, the company delivered an underwhelming 131 Tre heavy-duty trucks.
In April, Nikola’s chief financial officer Kim Brady will be stepping down after serving since November 2017. To fill the gap is the current vice president and controller, Anastasiya “Stasy” Pasterick, who played a major role in the company’s 2022 reverse merger with a SPAC. Amid the shakeup of top ranks, the vehicle maker Mark Russell stepped down as CEO to be succeeded by Michael Lohscheller. Before leaving the chief executive officer’s office, Russell held the post since June 2020 in the same money the company went public.