Nikola Shares Fall Amid Q2 Results
Shares of electric heavy-duty truck maker Nikola (NKLA) tumbled after the company reported its impressive second-quarter financial results. Despite surpassing Wall Street's expectations, the focus seems to be on factors other than the numbers.
Nikola's second-quarter report revealed a loss per share of 20 cents, with sales amounting to $15.4 million. Analysts had predicted a loss of 22 cents per share and sales of $15 million. During this quarter, the company manufactured 33 trucks and delivered 45.
Comparatively, in the previous quarter, Nikola endured a loss of 26 cents per share on sales of $11.1 million, producing 63 trucks and delivering 31. In the same period last year, the company incurred a loss of 25 cents per share from sales of $18.3 million. They produced 50 trucks and shipped 48.
Prior to the release of the results, Nikola stock had risen by 12% to $3.40. However, on the day of the announcement, shares experienced a 10% decline. In contrast, futures for both the S&P 500 and Nasdaq Composite showed a 0.2% increase.
Initially, after-hours trading saw an uptick in Nikola shares following a significant development on Thursday evening. The company finally achieved approval for Proposal 2 as enough shareholders cast their votes in favor. This outcome secures Nikola's ability to issue more shares and generate much-needed capital.
The delay in passing the proposal resulted from insufficient shareholder participation. Although the majority of voters previously showed support for Proposal 2, their combined shares didn't reach the required 50% of the total outstanding shares.
Nikola Seeking More Capital for Business Expansion
Nikola, the electric vehicle manufacturer, is in need of additional capital to further develop its business operations. As of the end of the second quarter, the company had approximately $310 million in cash reserves. However, Wall Street analysts anticipate that Nikola will be using around $150 million per quarter, and they don't foresee any positive free cash flow until 2027.
While most companies can easily issue more shares to raise funds, Nikola faced an unusual hurdle due to a cap imposed by its bylaws. Typically, the number of shares a company has is not a major concern for investors, as it serves as a mere accounting placeholder. What holds greater significance is the market capitalization, calculated by multiplying the number of shares by the stock price.
Adding to the current developments, Nikola announced a surprising change in leadership. Board chair Stephen Girsky will be taking over as the new CEO, replacing former CEO Michael Lohscheller, effective immediately. Girsky, a former vice chairman of General Motors (GM), assumes this role while Lohscheller cites a family health matter for his sudden departure.
Given the recent series of events, there will certainly be numerous topics for discussion during the second-quarter earnings conference call scheduled for 9:30 a.m. Eastern time.
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