NKLA Stock: The $100 Million Reason Nikola Is Down Today

  • Nikola (NKLA) stock is falling after the company disclosed that it would sell $100 million of its stock for $1.12 per share.
  • A portion of the shares will be sold to the public, while a prominent investor will buy a much larger amount of NKLA stock.
  • Nikola recently reported that it had obtained a total of 100 orders for its hydrogen-powered truck.
NKLA stock - NKLA Stock: The $100 Million Reason Nikola Is Down Today

Source: Nikola Press Center

Nikola (NASDAQ:NKLA) is trending on social media, and NKLA stock is falling 7.5% today after the electric-truck maker announced a stock offering of as much as $100 million. The shares will be sold for $1.12 each, well below yesterday’s closing price of $1.40. A portion of the funds will be raised by selling shares to the public, but a larger amount is expected to be raised by selling NKLA stock to a single, prominent investor.

Nikola makes battery-electric trucks as well as trucks powered by hydrogen fuel cells.

More About the Offering and the Side Deal

Nikola will sell nearly 30 million shares of NKLA stock to the public through a secondary offering and almost 60 million shares to an unnamed investor. Citi will be the underwriter for the transactions, and the bank will be able to buy another 4.5 million of the company’s shares.

Nikola expects to generate a total of $100 million from the transactions, although it will also have to pay fees for the stock sales.

Recent Developments Involving Nikola

On March 29, Nikola disclosed that it had obtained orders for a cumulative total of 100 of its Nikola Tre trucks. Those vehicles are powered by hydrogen fuel cells. The trucks can travel up to 500 miles before being refueled, and they can be refueled in 20 minutes, Nikola reported.

In a note to investors on March 28, Morgan Stanley wrote that it thinks the automaker will be in business for the “longer term,” partly due to its “comprehensive & differentiated hydrogen infrastructure efforts, and rapidly maturing manufacturing footprint,” Seeking Alpha reported. The bank kept an “equal weight” rating on the stock.

NKLA Stock: What Investors Should Watch

A single prominent investor’s decision to buy 60 million shares of NKLA stock bodes well for the company’s outlook, as that investor, who has likely closely examined the company and met with its management, is undoubtedly upbeat about its outlook.

However, investors who own or are looking to buy NKLA stock should monitor the extent to which the automaker can produce and sell a sizeable number of its trucks going forward.

On the date of publication, Larry Ramer 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.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.

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