NKLA Stock Alert: Nikola Receives Nasdaq Delisting Notice
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While everyone is talking about AI stocks and Nvidia (NASDAQ:NVDA), Nicholas (NASDAQ:NKLA) is also in fashion on this day. However, it’s not for reasons that investors would like. That’s because NKLA stock is down more than 20% so far on Thursday.
The move sent shares down to a new low of 58 cents per share. Underlying today’s losses are reports that the company has received a debarment notice from the Nasdaq as NKLA stock did not maintain minimum price requirements.
When a company finds itself in this scenario, companies often resort to reverse stock splits to meet foreign exchange requirements. Actually, Lordstown Engines (NASDAQ:CONDUCT) recently underwent a 1 for 15 stock split for the same reason. Shareholders shouldn’t be surprised if Nikola’s management is also taking this route.
Eventually, the company will have to do something. As reported:
“Nikola has been trying to raise cash for its operations by selling shares, like other electric vehicle (EV) companies, in a turbulent market, and on Wednesday urged shareholders to vote in favor of increasing the number of shares at its annual meeting of shareholders next month.”
NKLA Stock continues to struggle
It’s been a tough ride for NKLA stock as it works through its third straight weekly decline. So far, the shares are down about 43% over this period. The stock is also approaching its fourth straight monthly decline, down around 80% in that time.
The situation is dire, with stocks down more than 90% in the past 12 months and 99% from an all-time high. On the positive side, Nikola is finally generating income. However, it was hardly robust.
When the company reported earnings earlier this month, the company’s loss per share was in line with expectations, while revenue was just $11.12 million and missed consensus estimates. Nikola — and more broadly, upstart electric vehicle stocks — need to find a way to ramp up production without being burdened with costs. Particularly in the current economic and investment environment in which we find ourselves.
The sad reality is that the automotive industry is incredibly expensive. There are huge overheads associated with R&D, production, and sales, among other segments. For Nikola, a wave of controversy over the years hasn’t helped.
We’ll see what the company’s next steps are from here, but the situation isn’t good.
As of the date of publication, Bret Kenwell had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.
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