Published on 1 Sep 2022 on Zacks via Yahoo Finance
Nikola (NKLA) Seeks to Raise Capital, Romeo Buyout on Track
Shares of Nikola Corp NKLA declined 9.4% yesterday after it stated its intention to raise capital via a $400 million stock offering. The Arizona-based electric truck maker plans to issue up to $400 million in new stock in an “at-the-market” offering. On its second-quarter earnings call, Nikola had indicated that it was likely to raise additional funds as it looks to ramp up production amid escalating costs. NKLA had cash and cash equivalents of $441.7 million as of Jun 30, 2022.
The company is battling production bottlenecks, commodity cost inflation and logistic challenges, which are worsening its liquidity profile, thereby inducing it to seek cash infusion. Also, NKLA targets to deliver 300-500 production Tre BEV Trucks this year. With the aim to boost production amid rising battery costs, when it is already reeling under cash crunch and supply chain snarls (worsened by the Russia-Ukraine war), it doesn’t come as a surprise that the company had to resort to stock sale to raise capital.
As it moves ahead with its $144 million buyout of battery supplier Romeo Power, Nikola also announced yesterday that it has begun the exchange offer to buy all outstanding shares of Romeo Power.