nikola looks to raise 400 million from investors

The electric vehicle manufacturer Nikola Corporation announced today that it will be looking to raise up to $400 million in fresh funds via at-the-market offerings of its common shares.

According to a filing with the US Securities and Exchange Commission published today, the company has appointed Citigroup Global Markets as the sales agent for the offering that is expected to commence today. In an at-the-market offering, a company issues new shares and sells them to the public in the open market.

Nikola stated that the proceeds of the offering will be used for general corporate purposes and to strengthen the firm’s working capital. In addition, a portion of the funds may also be employed to acquire or invest in other businesses.

Just a day before Nikola’s share offering, Lucid Motors (LUCID) also filed an $8 billion shelf offering as electric vehicle manufacturers appear to be rushing to shore up their finances in response to rising costs and challenging logistics.

Nikola Increases Share Count by 7%

By the end of June 2022, Nikola had cash and equivalents of $480.5 million and long-term debt of $275.5 million if combined with assets of the recently acquired Romeo Power.

Meanwhile, during the first semester of 2022, the company produced net losses of $325.94 million and $443.95 million if combined with Romeo Power.

To complete the purchase of Romeo Power, a total of 22.05 million Nikola common shares were issued. Meanwhile, based on yesterday’s closing price of $5.97 per share, the proposed $400 million at-the-market offering would result in another 6.7 million new shares being issued.

According to the company’s prospectus, there were 420.27 million common shares of Nikola Corporation in circulation by the end of June 2022. Therefore, the newly issued shares connected to the Romeo deal and this latest offering account for around 7% of the company’s total outstanding shares.

As of this morning, shares of Nikola (NKLA) are dropping by 2.5% in pre-market action at $5.84 after the at-the-market offering was announced. So far this year, the stock has lost 40% of its value as challenging macroeconomic conditions and investors’ lack of confidence in the management’s ability to live up to its promises have continued to weigh on the performance of NKLA shares.

Nikola’s CEO Departs After Helping the Company Emerge from Chaos

Earlier this month, Nikola announced the departure of its Chief Executive Officer, Mark Russell, effective on January 1, 2023. Russell will be succeeded by Michael Lohscheller, the firm’s current President, who joined the firm in February 2022.

“Michael Lohscheller’s selection represents the completion of a thoughtful succession planning process by the Board of Directors. With more than 20 years in the automotive industry, Michael has deep experience as a seasoned executive and as a highly knowledgeable business operator”, stated Steve Girsky, Nikola’s Chairman of the Board.

Russell managed the company during a difficult period as charges of criminal fraud were brought up against the firm’s founder, Trevor Milton, who was ultimately convicted by a jury on three counts.

Milton was permanently banned by the court from being an officer at a corporation that issued financial securities to the public and disgorged the former CEO of Nikola from his ill-gotten gains.

“Milton’s scheme targeted individual, non-professional investors — so-called retail investors — by making false and misleading statements directly to the investing public through social media, and television, print and podcast interviews”, stated Milton’s indictment.

Since the Milton incident, Nikola has been attempting to make a comeback by working on the manufacturing and delivery of its Tre BEV. During the second quarter of 2022, the firm delivered its first 48 Tre BEV units in line with the management’s forecasts.

In addition, the company announced that it will be ramping up its production capacity at the Coolidge, Arizona facility to five units per shift. For the entire year, the firm expects to deliver between 300 and 500 Tre BEV trucks.

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