In a deja vu moment, Nikola Corp finds itself under the scrutiny of Nasdaq for the second time in eight months, as its share price languishes, prompting the exchange to threaten delisting. At the heart of this issue is the company’s current stock price of $0.65 and its failure to meet the Nasdaq’s minimum requirement.
At the time of this publication, Nikola Corp stock (NVVE) has witnessed a decline.
Nikola Corp
Current Price: $0.64
Change : -0.01
Change (%): (-1.21%)
Volume: 55.8M
Source: Tomorrow Events Market Data
The Nasdaq has given Nikola Corp a 180-day deadline, until July 17, to boost its share price above $1 for 10 consecutive trading sessions. Failure to do so could lead to delisting, a scenario Nikola already narrowly avoided in the past. The company’s shares have consistently traded below $1 since December 5, closing at 65 cents on the last trading day.
While a reverse stock split, a common tactic to increase share prices, remains an option to swiftly address this concern, Nikola’s CEO, Steve Girsky, remains nonchalant. In a recent interview, Girsky stated, “It doesn’t really change anything, except [it creates] the higher share price.” He emphasized that the board has not discussed a reverse split and it is not among the top priorities at the moment.
Reverse splits, though a quick fix, can be a double-edged sword for companies. Several transportation startups, including Embark Trucks, Lightning eMotors, and Proterra Inc., resorted to reverse splits, with mixed outcomes. Some experienced business failure, a cautionary tale for Nikola.
Nikola’s shares have fallen by a staggering 76% in the last year, partly attributed to an increase in authorized shares from 800 million to 1.6 billion. This move allowed the company to raise capital but diluted the value of existing shares.
Despite the stock struggles, Nikola sees some green shoots in its business. The company reported wholesaling 35 hydrogen-powered fuel cell trucks in Q4, with another seven undergoing customer testing. Notably, IMC, the nation’s largest drayage fleet, has placed a substantial order for 50 Nikola fuel-cell trucks, signaling potential growth in the hydrogen-powered transportation sector.
However, challenges persist as Nikola grapples with its cash position. While equity sales and borrowing have provided some relief, the company still carries a notice of going concern, indicating the looming threat of financial instability. Girsky remains optimistic, stating, “We’re managing to improve the cash profile of our business, satisfying our customers and getting trucks in the field.”
As the clock ticks, Nikola faces a pivotal period in its corporate journey, navigating the delicate balance between stock performance, business sustainability, and investor confidence.
