On Thursday, Nikola (NASDAQ:NKLA) Corporation, known for its electric and hydrogen-powered semi trucks, is reportedly considering various strategic alternatives to address its current financial difficulties. Among the options being explored are the sale of parts of the business or potentially the entire company. This news comes amid a challenging cash situation for the EV maker, with its shares plummeting 28% in late-afternoon trading.
The company is also contemplating other measures such as seeking new partners or securing additional funding, according to Bloomberg, citing sources familiar with the internal discussions. As of now, no definitive decisions have been made, and it is possible that the management may opt against taking any such actions.
Nikola's financial struggles are partly due to the significant costs associated with scaling up production of its fuel-cell electric truck. The company's financial position has weakened, with cash and cash equivalents dwindling to $198.3 million at the end of September from $464.7 million at the end of the previous year. Over the course of 2024, Nikola's stock value has eroded by nearly 96%.
In an investor call held in October, CEO Stephen Girsky acknowledged the company's efforts to secure additional capital, mentioning that Nikola was "actively talking to lots of potential different partners." Despite the challenges facing the EV sector, Nikola has emphasized its commitment to raising capital, reducing liabilities, preserving cash, and serving customers effectively.
The potential sale of Nikola would mark the end of a tumultuous period for the company, which went public via a blank-check deal in 2020. Following its public debut, founder Trevor Milton resigned and was later found guilty of defrauding investors about the company's technological advancements. Since then, Nikola has undergone several leadership changes while struggling with sluggish sales in the clean-tech market and a steep decline in its stock price. Shares were down 22% as of 3 p.m. Thursday in New York, reflecting a 95% loss in value over the past 12 months.
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