Today, electric vehicle (EV) stocks are gaining focus among investors in a big way. Many of the highest-profile names including that of Nikola (NASDAQ:NKLA) are seeing outsized interest right now. For NKLA stock, today’s gain of roughly 3% at the time of writing is in line with the average move in this peer group.
An EV company focused on the light- and heavy-duty trucking segment, Nikola has had some challenges over the past year. Short sellers have jumped on Nikola’s former management team and various statements made by the company used to raise money previously as indications Nikola couldn’t be trusted. Hindenburg’s short report from last year has been a key catalyst for the downside momentum this stock has seen this year.
That said, Nikola appears to be a company that’s turning things around. The company’s management team is different, as is the company’s outlook more than a year after going public. It appears investors looking forward to the potential for Nikola to gobble up market share in an increasingly competitive EV trucking segment.
Today, there’s another catalyst that’s taking shares of NKLA stock higher. Let’s dive into what was announced and why investors are turning bullish on this EV play.
NKLA Stock Higher on Equity Raise Announcement
Today, NKLA stock is on the move after the company announced a second $300 million capital raise with Tumin Stone Capital. This upgraded deal sees Tumin Stone Capital increasing its initial agreement to buy $300 million of NKLA stock to $600 million. That could result in the private investor owning approximately 20% of this early stage EV company.
Any big bet from a notable party is worth considering for smaller investors intrigued by Nikola’s prospects here. Indeed, Tumin Stone appears to be a believer in Nikola’s prospects moving forward. Investors looking at such large insider transactions may certainly look upon NKLA stock favorably in this light.
The company looks to use this equity line purchase agreement as a means of improving its liquidity as the company ramps up toward its production milestones next year. The agreement adds to Nikola’s existing liquidity, with a total of around $800 million in cash and credit available through the end of this year to fund its expansion plans.
Currently, Nikola remains a more speculative bet on the EV sector due to its early stage nature. However, investors have reason to look at today’s announcement favorably.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.