Nikola Corp, a prominent electric truck manufacturer, faces the imminent threat of delisting from the Nasdaq stock exchange, as per a recent regulatory filing disclosed by the company on Thursday.
On May 24, Nikola received a formal notification from Nasdaq highlighting that its share price had dipped below $1 for a consistent period of 30 days, a situation that puts the company’s listing in jeopardy. In accordance with the exchange’s regulations, Nikola now has a window until November 20 to elevate its share price above $1 for a continuous stretch of 10 business days and stay compliant with the Nasdaq’s minimum price rule.
A stark contrast to its previous performance, Nikola’s share value soared to a record high of $65.90 in 2020 during its phase as a widely discussed SPAC (Special Purpose Acquisition Company), steered by the then-CEO and co-founder, Trevor Milton. Since Milton was indicted on federal securities fraud charges, however, the company’s stock price has spiraled down by 20% to just $0.62.
Nikola’s predicament is a reflection of the broader trend among numerous companies that ventured into the public domain through SPAC mergers only to experience a precipitous fall in market cap, some even facing delisting predicaments. Lordstown Motors, for instance, is another enterprise that acknowledged receiving a delisting notification this month. A combination of the notification and a faltering deal with Foxconn led Lordstown to resort to a reverse stock split.
Public markets’ access to significant capital was the major draw for mobility companies like these. The SPAC mechanism initially seemed promising, with several businesses gaining traction as viral meme stocks in 2021. However, as fundamentals start to impact companies like Nikola, Arrival, Bird, and Canoo, their stock prices are witnessing severe pressure.
In a bid to stay afloat, Nikola has proposed to raise more funds by issuing additional shares and is actively encouraging its shareholders to support this plan. To pass this proposal, the company requires over 50% of the currently outstanding shares to vote in its favor.
