Shares of Nikola Corp fell to a record low on Friday after the electric truck maker said it plans to sell shares to raise $100 million because of high production costs.
Nikola said late Thursday it will sell about 29.9 million shares in a public offering and 59.4 million shares to fund Antara Capital LP, the existing holder of the company’s convertible bonds.
Wall Street was concerned after Nikola’s offer price of $1.12 represented a 20% discount from Thursday’s last close of $1.40.
Shares of the EV startup, based in Phoenix, Arizona, fell as much as 17.8% to $1.15 in early trading, the biggest one-day drop since January 2021.
“Despite the cash injection of $100 million, management still has a lot of work to do to balance the cash burn with its existing liquid assets,” said BTIG analyst Gregory Lewis, downgrading the stock to “neutral” from “buy”.
The company said it had $123 million in cash and $85 million in restricted cash as of March 28.
Nikola, like other smaller EV companies, is struggling to ramp up production at a time when demand is stagnant due to high borrowing costs due to high interest rates.
Last year, the company said it could sell shares to raise up to $400 million.
In February, the company said it did not expect factors affecting demand for its battery-powered trucks to ease in the foreseeable future after it delivered less than a sixth of its battery-powered trucks in the fourth quarter.
Other EV stocks, including Tesla Inc, Rivian Automotive Inc, Lordstown Motors Corp and Lucid Group Inc, are all up between 2% and 6%.