Investment Seeking by Nikola; Romeo Buyout Proceeding


Nikola Corp (NASDAQ:NKLA)

Nikola Corp (NASDAQ:NKLA) stock dropped 9.4% yesterday after the company announced plans to issue $400 million in new shares of stock. The Arizona electric vehicle manufacturer is planning an “at-the-market” offering of up to $400 million in new stock. Nikola stated in its Q2 results call that the company would likely seek extra funding to increase production in the face of rising expenses. As of June 30, 2022, NKLA had $441.7 million in cash and equivalents.

The liquidity profile of Nikola Corp (NASDAQ:NKLA) is deteriorating due to production bottlenecks, commodity cost inflation, and logistical issues, compelling the company to seek cash injection. In addition, NKLA plans to ship between 300 and 500 fully functioning Tre BEV Trucks to customers this year. Unsurprisingly, the company had to resort to stock sales to raise finance to increase production despite growing battery costs and cash crunch (worsened by the Russia-Ukraine war).

Nikola Corp (NASDAQ:NKLA) stated yesterday that the exchange offer to buy all existing shares of Romeo Power had begun as part of its $144 million buyout of the battery provider.

The acquisition of Romeo by Nikola Corp (NASDAQ:NKLA) was announced on August 1 and would be completed by issuing new shares of the company’s stock. According to the terms of the deal, Romeo owners would get 0.1186 shares of Nikola for each share of Romeo they own. This represents a premium of approximately 34% over Romeo’s closing share price on July 29. A newly formed Nikola subsidiary will join Romeo upon completion of the offer. Closing is expected to occur in the fourth quarter of 2022, pending satisfaction with usual closing conditions and approval by shareholders.

Meanwhile, Nikola Corp (NASDAQ:NKLA) has announced significant leadership changes, which will take effect immediately. Pablo Koziner and Carey Mendes have been promoted to the president within their respective departments: Commercial and Energy. Nikola’s president, Michael Lohscheller, will also become the company’s CEO on January 1, 2023, when the division presidents report to him.

Zacks presently ranks Nikola Corp (NASDAQ:NKLA) as the third-best stock in its category (Hold). The company lost 25 cents per share in the second quarter of 2022, which is better than the 27 cents per share loss predicted by the Zacks Consensus Estimate. The company’s revenue of $18 million in the period under review was $2 million higher than the average estimate.

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About the author: I'm a financial journalist with more than 1.5 years of experience. I have worked for different financial companies and covered stocks listed on ASX, NYSE, NASDAQ, etc. I have a degree in marketing from Bahria University Islamabad Campus (BUIC), Pakistan.