Nikola, the electric truck maker revealed that it received a delisting notice from the public exchange on May 24 due to its share price consistently trading below $1 for the past 30 days. Nikola has been given until November 20 to comply with Nasdaq’s minimum price rule, which mandates that the share price remains above $1 for 10 business days.
During the height of its buzz in 2020, Nikola shares reached as high as $65.90 when Trevor Milton led the company, its co-founder and former CEO. However, since then, the share price has plummeted by 20% to a mere $0.62.
Nikola joins the growing list of companies that went public through mergers with special purpose acquisition companies (SPACs) only to experience a sharp decline in market capitalization and, in some cases, face potential delisting.
Lordstown Motors, another such company, also recently received a delisting notice. In response, Lordstown opted for a reverse stock split. Many of these mobility companies were initially attracted to the financial opportunities offered by the public markets, with SPACs gaining popularity and even becoming meme stocks in 2021.
Now, the realities of these companies’ financial situations are catching up with them, affecting not only Nikola but also other SPACs like Arrival, Bird, and Canoo.
In an effort to secure additional funding, Nikola has been working on issuing more shares. The company is urging its shareholders to vote in favor of a proposal that would allow for an increase in the number of shares of its common stock. For the proposal to pass, it requires favorable votes from more than 50% of Nikola’s outstanding shares.
The future remains uncertain for Nikola as it faces the challenges of regaining compliance with Nasdaq’s minimum price rule and stabilizing its financial position through shareholder support and potential fundraising efforts.
The upcoming shareholder vote will play a crucial role in determining Nikola’s path forward. By seeking approval to increase the number of shares, the company aims to bolster its financial standing and potentially attract new investors. However, securing a favorable outcome will not be without challenges, as convincing more than 50% of outstanding shareholders to vote in favor of the proposal is no small feat.
Nikola’s recent struggles are further complicated by the legal issues surrounding its former CEO, Trevor Milton. He was indicted on federal securities fraud charges, which undoubtedly cast a shadow over the company’s reputation and investor confidence. Nikola has been striving to distance itself from the controversy and regain trust in its leadership and vision.
Amidst these hurdles, the electric truck developer faces the pressing need to address its financial stability. Raising additional capital will be vital for Nikola to fund its operations, continue its research and development efforts, and maintain its position in the highly competitive electric vehicle market.
The coming months will be critical for Nikola’s survival and resurgence. The outcome of the shareholder vote, coupled with its efforts to comply with Nasdaq’s requirements, will determine whether the company can regain its footing and rebuild investor trust. It remains to be seen whether Nikola can navigate these challenges and find a path toward long-term success in the evolving landscape of electric vehicles and sustainable transportation.
