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Shares of Nikola are up about 60% this yr.
Courtesy Nikola
Shares of electrical heavy-duty truck maker
Nikola
fell sharply after the corporate reported better-than-expected second-quarter outcomes. However the earnings numbers aren’t the one issues that matter proper now.
Nikola (ticker: NKLA) reported a loss per share of 20 cents from gross sales of $15.4 million on Friday morning. Wall Road was searching for a 22-cent loss from gross sales of $15 million. The corporate produced 33 vehicles and delivered 45 within the quarter.
That compares to a lack of 26 cents on gross sales of $11.1 million within the earlier quarter. The corporate produced 63 vehicles and delivered 31 in that quarter. Within the year-ago quarter, Nikola reported a 25-cent loss from gross sales of $18.3 million, and produced 50 vehicles and shipped 48.
Nikola inventory closed up 12% to $3.40 on Thursday earlier than outcomes have been launched. Shares fell 26% to $2.50 on Friday, whereas the
S&P 500
and
Nasdaq Composite
fell 0.5% and 0.4%, respectively.
Shares have been initially up after-hours after a long-running and unusual saga for Nikola got here to an finish Thursday night. After months of attempting, the corporate announced that Proposal 2 had obtained sufficient votes from shareholders to cross. Approval was vital for Nikola to problem extra shares that may be bought to boost wanted capital.
The proposal took time to cross as a result of not sufficient shareholders have been voting. In earlier votes, a majority of voters have been in favor of Proposal 2, however the shareholders voting sure didn’t have sufficient shares to quantity to 50% of the entire shares excellent.
More often than not, issuing extra shares isn’t an issue for firms. Bumping up towards a cap tied to an organization’s bylaws, which occurred with Nikola, is somewhat uncommon. What’s extra, the variety of shares an organization has isn’t usually of concern to buyers. The quantity is an accounting placeholder. What issues extra is the market capitalization, which is calculated by taking the variety of shares occasions the inventory value.
Nikola will want extra capital to construct its enterprise. Administration estimates one other $600 million will probably be wanted, past what it has out there, to realize profitability. Nikola ended the second quarter with roughly $310 million in money on its books and whole liquidity of greater than $740 million. Wall Road expects the corporate to make use of about $150 million 1 / 4 and doesn’t mission optimistic free money movement till 2027.
Money use got here in under $150 million for the second quarter as the corporate decreased capital spending and working bills. Administration says it ought to have the ability to preserve money used under the $150 million degree per quarter.
Decrease money use is a optimistic, however the chance of coming capital raises could be one other issue weighing on shares. Buyers don’t like to purchase inventory forward of an providing. Shares may also be weak as a result of they have been up about 300% within the three months coming into Friday’s earnings report.
Trying forward, Nikola expects to ship 60 to 90 vehicles within the third quarter and 300 to 400 vehicles for all of 2023.
The corporate additionally named a new CEO Friday. That’s a shock and one other concern weighing on buyers’ nerves.
Board chair Stephen Girsky is taking on from CEO Michael Lohscheller, who stepped down efficient instantly. Girsky is a former vice chairman of
Common Motors
(GM). Lohscheller is stepping down resulting from a household well being matter, in accordance with the information launch.
It has been a busy information cycle for Nikola.
Write to Al Root at allen.root@dowjones.com
