Nikola shares retreat on share offering

Nikola Corp (NASDAQ:NKLA) shares are under heavy selling pressure on Monday after the company said it would sell shares amid efforts to raise cash to ramp up production of its hydrogen fuel electric vehicles.

In a filing with the U.S. Securities and Exchange Commission, Nikola (NKLA) entered into a purchase agreement with investors for the sale of up to $160M of senior notes that are convertible into shares of stock in the company. The net proceed of the initial sale of $80M is estimated at $74.3M. The new securities purchase agreement supplants the purchase agreement from August 2023.

The company also filed a shelf registration to sell shares up to $500M, including debt securities.

In its most recent quarterly results, Nikola (NKLA) reported a narrower loss from a year ago, but operating cash was nearly halved in the six-month period from the end of 2023. The company also remains free cash flow negative by $148.3M.

“Last quarter we talked about the importance of expanding our reach to meet the demands of end fleet users virtually anywhere in North America,” the company said in its Q2 report, with repeat orders from two national accounts including 4GEN and IMC, and new customer Walmart Canada.

NKLA is down 10%.