Electric-Truck Maker Nikola Nearing Bankruptcy Filing, Shares Plummet
(Reuters) – Electric-truck maker Nikola is on the brink of filing for bankruptcy, according to sources familiar with the matter as reported by the Wall Street Journal on Thursday. The news sent the company’s shares tumbling by 20% to just 60 cents in extended trading.
Based in Phoenix, Arizona, Nikola has been grappling with financial challenges, leading to a dwindling cash balance. The company has been incurring significant losses on each unit sold, making it difficult to sustain operations.
In an effort to address its financial woes, Nikola has been working with law firm Pillsbury Winthrop Shaw Pittman to explore various options, including a potential sale or restructuring through bankruptcy proceedings.
Despite the mounting pressure, Nikola stated on Thursday that it is assessing multiple avenues for financial restructuring, which may involve securing additional financing. However, the company refrained from confirming any plans for bankruptcy.
Meanwhile, Bloomberg News had previously reported that Nikola was considering selling off parts of its business or even the entire company to alleviate its financial strain.
Nikola’s financial woes are evident in its cash reserves, which plummeted to $198.3 million by the end of September, down from $464.7 million at the close of 2023. The company’s stock has also suffered a significant decline, losing over 99% of its value since its IPO in 2020.
Struggling to maintain compliance with Nasdaq’s listing rules, Nikola has resorted to multiple reverse stock splits as its shares dipped below the $1 mark on several occasions.
As Nikola navigates these challenging times, the future remains uncertain for the once-promising electric-truck maker. The company’s fate hangs in the balance as it weighs its options amidst financial turmoil.
(Reporting by Akash Sriram in Bengaluru; Editing by Shilpi Majumdar and Shounak Dasgupta)
