Nikola Corp, the electric truck manufacturer, may resort to a reverse stock split if its stock fails to meet Nasdaq’s minimum bid price requirements within a specific timeframe, according to the company’s CEO, Michael Lohscheller.
The announcement came on Thursday as Nikola’s stock closed at approximately 57 cents, revealing ongoing struggles with significant losses, high cash burn, and sluggish demand for its battery-powered trucks. Last week, the company received a delisting notice from the stock exchange.
To comply with Nasdaq regulations, shares must trade above $1, and a notice is issued if they remain below this threshold for 30 consecutive business days. Companies are given a 180-day period during which their stock must trade above $1 for at least ten consecutive days to meet the rules. In some cases, an additional 180-day period can be granted if certain requirements are met.
Lohscheller stated that if Nikola fails to comply within these periods, a reverse stock split could be executed. However, such a move would require approval through a shareholder vote, as it involves consolidating the existing shares into a smaller number.
During a webcast held to address shareholder questions, Lohscheller expressed confidence in regaining compliance with Nasdaq’s regulations, emphasizing the company’s commitment to preventing the delisting of Nikola’s common stock. Following the webcast, there was a 1% increase in after-market trading.
Investors have been closely monitoring the cash reserves of Nikola and other electric vehicle manufacturers, concerned that declining sales could prompt these companies to pursue additional share sales to raise funds. In the first quarter, Nikola reported a cash burn of $240 million, compared to $200 million per quarter in 2022.
Ahead of the company’s annual meeting next week, Lohscheller urged shareholders to vote in favor of increasing the number of shares that Nikola is authorized to issue. Nikola previously stated that “without these additional shares, Nikola’s ability to continue its ongoing operations and objectives, including Nikola’s need for capital, will be out of reach.”
Last month, Nikola announced a production pause, redirecting its focus towards hydrogen fuel cell trucks while continuing to manufacture battery electric trucks based on customer orders.
