Electric truck maker Nikola may conduct reverse stock split to comply with Nasdaq rules

By Abhirup Roy

SAN FRANCISCO (Reuters) – Electric truck maker Nikola Corp may complete a stock split if its stock fails to meet Nasdaq’s minimum bid price requirements within a certain period, its chief executive Michael Lohscheller said on Thursday.

Nikola, which closed around 57 cents on Thursday as it battled mounting losses, strong cash burn and sluggish demand for its battery-powered trucks, said last week it had received a delisting notice from the stock exchange.

The Nasdaq requires stocks to trade above $1 and issues a notice if trading below that mark for 30 consecutive business days.

Companies then have a 180-day period in which the stock must trade above $1 for at least 10 consecutive days to comply with the rules, although a second 180-day period can be granted if it meets other requirements.

If Nikola cannot comply during those times, the company can execute the reverse stock split, subject to a shareholder vote, to move its shares above the $1 mark, Lohscheller said.

A stock split consolidates the number of existing shares into fewer shares.

“We believe we will be able to regain Nasdaq compliance and will work to ensure Nikola common stock is not delisted,” he said during a webcast to answer questions from viewers. shareholders which was followed by a 1% increase in after-sales prices. “We have tough decisions to make as we navigate through difficult times.”

Investors have focused on the cash reserves of Nikola and other electric vehicle makers, fearing that the slowdown in sales will push the companies to continue their stock sales to raise cash.

Cash burn in the first quarter was $240 million, compared to $200 million per quarter in 2022, Nikola said last month.

Lohscheller on Thursday urged shareholders to vote at its annual meeting next week in favor of increasing the number of shares the company is authorized to issue.

The truck maker said earlier that “without these additional actions, Nikola’s ability to continue its ongoing operations and objectives, including Nikola’s need for capital, will be out of reach.”

Nikola said last month it would suspend production to focus on hydrogen fuel cell trucks and only build battery-electric trucks to order.

(Reporting by Abhirup Roy in San Francisco; Editing by Jamie Freed)

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