SPECIAL REPORT The Top 7 Stocks for 2024

NKLA Stock Alert: Nikola Plunges on New Note Offering

Advertisement

  • Nikola (NKLA) is launching a direct offering of convertible notes worth $325 million.
  • This is just the latest in a run of bad news for the hydrogen-focused electric vehicle (EV) firm.
  • The company losing its hydrogen fuel leader may be the worst blow of all to NKLA stock.

Nikola (NASDAQ:NKLA), which has been trying to make semi-trucks powered by batteries and hydrogen, is launching a $325 million offering of convertible notes. As of this writing, NKLA stock is down about 15% on the news. Shares opened at about $1.69 per share with a market capitalization of around $1.2 billion.

Instead of getting new money from an institution, Nikola hopes that small investors will help it raise about $125 million in the initial tranche. The notes carry an interest rate of 5% with the first payment due in January 2024.

NKLA Stock: A Very Bad Month

This offering decision continues the terrible, horrible, no good, very bad month for Nikola.

InvestorPlace contributors have already warned investors to get out of NKLA stock — even before CEO Michael Lohscheller resigned from the electric vehicle (EV) firm. Recently, the company reported a big second-quarter loss. Then the EV firm recalled nearly all of its battery-powered trucks based on fire risks. Nikola now says it may not hit its delivery targets as it tries to fix the problem.

On top of that, Carey Mendes — the person who led Nikola’s hydrogen truck efforts, signing a deal to build 50 hydrogen fueling stations — resigned on Sunday. Mendes became Nikola’s President of Energy less than a year ago and first joined the company back in October 2021. The deal for the hydrogen stations was signed with Voltera and was due to cost up to $1 billion.

At the beginning of August, shares sold for around $3 apiece. Now after all the bad news, NKLA stock is worth almost half of that.

Over on Stocktwits, traders are not amused. The bears are openly worried about bankruptcy. Meanwhile, bulls are noting that there are still analysts with an average $2.75 price target on the stock. Others point out that Volvo (OTCMKTS:VLVLY) has also had to recall electric trucks because of fire risks.

What Happens Next?

Out of all the bad news, the departure of Mendes is what should most concern NKLA stock investors. If Nikola can’t get its hydrogen fuel stations built, on top of its battery problems, there may be no way forward.

On the date of publication, Dana Blankenhorn 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.


Article printed from InvestorPlace Media, https://investorplace.com/2023/08/nkla-stock-alert-nikola-plunges-on-new-note-offering/.

©2024 InvestorPlace Media, LLC