Nikola Takes Drastic Measure With 1-For-30 Reverse Stock Split

What’s going on here?

Nikola just announced a 1-for-30 reverse stock split to comply with Nasdaq’s listing rules and boost its plummeting stock price, effective June 25, 2024.

What does this mean?

This reverse stock split will consolidate 30 shares of Nikola into one, reducing the number of outstanding shares and increasing the share price. The move aims to avoid delisting from Nasdaq, following a tough period. The electric and hydrogen truck maker saw its stock fall over 15% to a new low of 40 cents and recorded a cash reserve drop to $345.6 million as of March 31, 2024. With first-quarter revenue missing Wall Street expectations due to fewer hydrogen truck deliveries, Nikola’s market capitalization now stands at approximately $652 million.

Why should I care?

For markets: Riding uncertainty.

Nikola’s reverse stock split is meant to meet exchange standards and create a better market perception by elevating its share price. Despite this, Nikola’s stock had already declined about 45% earlier in the year. This volatility raises concerns about the firm’s future, so investors should follow its strategies closely.

The bigger picture: Reviving a faltering giant.

Nikola’s financial troubles, marked by declining cash reserves and unmet revenue expectations, highlight the challenges faced by emerging tech companies in the competitive EV market. This reverse stock split is crucial for Nikola to stay listed on Nasdaq and signal strength to the market. However, long-term success will depend on operational adjustments and meeting delivery targets.

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Originally Posted June 20, 2024 – Nikola Takes Drastic Measure With 1-For-30 Reverse Stock Split