- Nikola fell as much as 21% on Monday after the company released a prospectus describing its intention to sell up to 23.9 million shares.
- In addition, existing shareholders seek to sell up to 53.4 million shares, according to the prospectus.
- Nikola said the proceeds from the sale would be used for general corporate purposes.
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Investors soured on Nikola shares after the electric vehicle maker released a prospectus after the market closed on Friday detailing its intention to sell up to 23.9 million shares.
The 23.9 million shares would be derived from the exercise of a combination of public and private warrants, according to the prospectus.
Additionally, existing stakeholders could sell up to 53.4 million shares, although Nikola would not receive the proceeds from those sales, according to the prospectus. Shareholders who requested to sell shares include BlackRock, Fidelity and ValueAct.
Shares plunged as much as 21%, to $ 38.49, in premarket trading on Monday. Nikola fell as much as 58% from its peak of $ 93.99 in June.
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Nikola said he would use the proceeds from the sale of shares for general corporate purposes. The stock offering should not surprise investors who knew that the company does not expect to generate revenue until 2021.
The higher dilution would raise Nikola’s outstanding share count to 384.8 million shares from 360.9 million, according to the filing. Nikola CEO Trevor Milton owns 25.4% of Nikola.
Nikola saw investor demand for his shares skyrocket after the company went public through a reverse merger with a “blank check” company, VectoIQ, in June. Investors appear to be looking for the next Tesla, which has more than tripled in value to date and has become the automaker with the largest market capitalization.
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Another electric vehicle company that plans to go public through a reverse merger with a special-purpose acquisition company is Fisker, which recently announced a merger with Spartan Energy.
While investors may not like Nikola’s drop in value, analysts seem to be taking the other side. Earlier this month, JPMorgan upgraded Nikola to “buy” on a valuation call after the company fell below its $ 45 price target.
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