Embark Technologies (NASDAQ:EMBK) stock is in focus on Friday. While shares are roughly flat on the day, Embark layoffs are making some headlines.
According to a recent regulatory filing, Embark’s Board of Directors decided to reduce the current workforce by roughly 230 employees. Per the filing:
“The decision was based on cost-reduction initiatives intended to reduce operating expenses […] The Company currently estimates that it will incur charges of approximately $7 to $11 million in connection with the reduction in force.”
If you haven’t heard of Embark before, don’t worry. The autonomous trucking technology company commands a market capitalization of less than $100 million.
Lately, EMBK stock has struggled quite a bit. At one point today, shares were down more than 11% on news of the Embark layoffs. While shares are about flat this week, they have declined more than 30% over the past month.
When we zoom out, the performance is even worse. Shares are down about 85% from the August 2022 high and down 97% from the 2022 high. That’s pretty horrible performance. When we consider that, though, the Embark layoffs come as less of a surprise.
More Than Just Embark Layoffs to Consider
While many electric vehicle (EV) stocks and automotive startups have come public in the last few years, most have struggled. As if dethroning some of the largest, most efficient and fully capitalized legacy automakers wasn’t hard enough, doing so with robust competition has made things even harder. Now, these companies are staring down a bear market in equities and a possible recession in the global economy.
Embark took a different path, looking to optimize trucking routes. A successful deployment would improve safety and reduce costs. However, the company has also struggled. Aside from the Embark layoffs, there are other developments in play. Per the same filing announcing the workforce reductions:
“[The board] approved a process to explore, review and evaluate a range of potential strategic alternatives available to the Company, including, without limitation, exploring alternative uses of the Company’s assets to commercialize its technology, additional sources of financing, as well as potential dissolution or winding up of the Company and liquidation of its assets.”
In other words, a potential sale could be on the table for Embark. According to reports, the company’s banking advisory has already met with several other autonomous vehicle (AV) companies “to explore selling Embark’s assets.”
While Embark Technologies showed true promise, it appears to be struggling badly at the moment. EMBK stock reflects that reality.
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On the date of publication, Bret Kenwell did not hold (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.