Nikola (NASDAQ:NKLA) stock is trending on social media and tumbling over 20%. The automaker, which makes both battery-electric and hydrogen-powered trucks, disclosed that it would offer a combined $300 million of NKLA stock and convertible notes.

When companies sell more shares of their stock, their stock prices usually drop. That’s because stock offerings increase the number of shares outstanding. As a result, each share represents a lower “ownership percentage” of the firm. The latter phenomenon is called “dilution.”

More About Nikola’s Offering

The automaker intends to sell $100 million of additional NKLA stock, along with $200 million of “green convertible senior notes due in 2026.” When companies issue green notes or bonds, they are committing that the funds used to purchase those instruments will support “projects that meet certain sustainability requirements,” the Department of Energy explains.

Nikola reported that it will utilize the funds that it raises “for working capital, general corporate purposes and unspecified (environmentally sustainable) projects.”

More Information About Nikola and NKLA Stock

The company has had more than its share of trouble in recent months. In August, the automaker recalled every one of the battery-electric trucks that it had previously delivered due to a coolant leak in its batteries that led to fires. Additionally, the company’s CFO stepped down last month.

On a positive note, however, NKLA reported in November that it had obtained an impressive “277 non-binding orders from 35 customers for (its) hydrogen fuel cell electric truck.” It also received orders for 47 battery-electric vehicles from a single dealer, even though they had been recalled and were still being repaired.

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 are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.