- Nikola fell as much as 21% on Monday after the company filed a prospectus outlining its intent to sell up to 23.9 million shares.
- Additionally, existing shareholders are looking to sell up to 53.4 million shares, according to the prospectus.
- Nikola said the proceeds from the sale would be used for general corporate purposes.
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Investors soured on Nikola stock after the electric-vehicle maker filed a prospectus after the market close on Friday detailing its intention to sell up to 23.9 million shares.
The 23.9 million shares would be derived from the exercise of a mix of public and private warrants, the prospectus said.
Additionally, existing stakeholders could sell up to 53.4 million shares, though Nikola would not receive proceeds from those sales, the prospectus said. Shareholders that filed to sell stock include BlackRock, Fidelity, and ValueAct.
Shares plummeted as much as 21%, to $38.49, in premarket trades on Monday. Nikola was down as much as 58% from its peak of $93.99 in June.
Nikola said it would use the proceeds from the share sale for general corporate purposes. The share offering shouldn’t be a surprise to investors who were aware that the company doesn’t expect to generate revenue until 2021.
The increased dilution would bring Nikola’s outstanding share count to 384.8 million shares from 360.9 million, according to the filing. Nikola CEO Trevor Milton owns 25.4% of Nikola.
Nikola saw investor demand for its shares skyrocket after the company went public via a reverse merger with a “blank check” company, VectoIQ, in June. Investors seem to be searching for the next Tesla, which has more than tripled in value year-to-date and become the automaker with the largest market capitalization.
Another electric-vehicle company planning to go public via a reverse merger with a special-purpose acquisition company is Fisker, which recently announced a merger with Spartan Energy.
While investors may not like Nikola’s fall in value, analysts seem to be taking the other side. Earlier this month, JPMorgan upgraded Nikola to “buy” on a valuation call after the company fell below its $45 price target.
Markets Insider