Nikola's proposal for reverse split sends its stock even further below $1

By Emily Bary

EV company is asking shareholders to vote for a plan that would help it maintain listing requirements and potentially broaden investor base

Nikola Corp. wants to do a reverse split of its stock, and it's asking shareholders to support that plan.

The electric-vehicle maker faces the risk of Nasdaq delisting due to its low share price, which was 98 cents as of Wednesday's close and 88 cents in recent Thursday action. A reverse split could help the company maintain its listing requirements, it said in its latest proxy filing. Companies are at risk of a delisting if their stock trades below a $1 threshold for more than 30 consecutive business days.

Additionally, by conducting a reverse split, Nikola (NKLA) could "broaden the pool of investors that may be interested in investing in the company by attracting new investors who are prohibited from or prefer not to invest in shares that trade at lower share prices," it said in Wednesday's filing.

Nikola is looking to do a reverse split with a ratio of up to 1-to-30 times. The low bound that it's proposing is a ratio of 1 share for every 10 shares.

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That would significantly reduce the number of shares of its common stock, if it's approved by shareholders. In a reverse split, the price of each share is higher, but there are fewer outstanding.

Nikola shares are down more than 10% in Thursday morning trading, though they're near flat on a year-to-date basis. The stock is down nearly 90% over a two-year span.

The company earlier in April disclosed that it produced 43 hydrogen-electric trucks in the first quarter, which was more than its annual total for 2023. In the wake of a recall last year of Nikoka's battery-electric trucks, the company also said earlier this month that it was beginning the process of returning its BEV 2.0 trucks to customers.

See also: Nikola made more fuel-cell trucks in Q1 than it did in all of 2023

Smaller electric-vehicle makers have had a difficult recent go, as the business is capital intensive and the market is becoming increasingly competitive.

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-Emily Bary

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04-11-24 1103ET

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