Nikola (NASDAQ:NKLA) stock is taking a beating on Monday after filing a prospectus with the U.S. Securities and Exchange Commission (SEC) to warrant more shares of its stock.
According to the SEC filing, the company is planning to issue warrants for up to 23.89 million shares of NKLA stock. This includes up to 890,000 private warrants that can be exercised for shares of the stock, as well as 23 million public warrants that can be exercised for Nikola stock.
Nikola says that it will receive up to $274.7 million from the exercising of these warrants. That assumes the warrants are exercised fully and for cash. The warrants have an exercise price of $11.50 per share. The company says that it expects to use funds generated from this for “general corporate purposes.”
Nikola also notes that selling shareholders may choose to offload up to 53.39 million shares of the company’s stock. There’s no fixed time or price at which these shareholders may choose to sell their shares. However, NKLA notes that it won’t receive any proceeds from these sales.
Nikola is a maker of electric trucks and it’s currently operating with losses. That includes an $88.7 million net loss for the full year of 2019. The company expects to start turning a profit once sales of its electric trucks start to pick up. That could come as early as 2021 with its Nikola Tre BEV. It will also launch its Nikola Two FCEV in 2023.
NKLA stock was down 20.9% as of Monday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.
