Nikola (NASDAQ:NKLA) Corporation (NASDAQ:NKLA), a player in the zero-emissions transportation sector currently trading near its 52-week low at $1.61 with a market capitalization of $98 million, has entered into an Equity Distribution Agreement with BTIG, LLC, enabling the sale of up to $100 million of its common stock in an "at-the-market" offering, as disclosed in a recent SEC filing.
According to InvestingPro analysis, the company appears undervalued based on its Fair Value metrics, though it faces significant financial challenges. The agreement, dated today, allows Nikola to sell shares from time to time, with BTIG acting as the sales agent.
The company, incorporated in Delaware and headquartered in Phoenix, Arizona, will pay BTIG a commission of 2.5% of the gross proceeds from each sale. The offering will be conducted under Nikola's existing shelf registration statement and related prospectus, both previously declared effective by the SEC. The shares are to be offered following the prospectus supplement dated today.
Moreover, on Sunday, Nikola received $65 million in gross proceeds from the sale of common stock to certain note holders. This move comes as part of a temporary conversion rate adjustment for the company's convertible senior PIK toggle notes due in 2026.
InvestingPro data reveals the company is quickly burning through cash, with negative EBITDA of $498.75 million and a concerning financial health score of 1.48, rated as WEAK by InvestingPro's comprehensive analysis system. The adjustment period, which began on Sunday and extends through January 31, 2025, allows for a maximum of 48,083,062 shares of common stock to be issued upon conversion of all notes.
In other financial developments, Nikola has fully repaid its Series B-1 Senior Convertible Notes due 2025, totaling $39.4 million, resulting in the termination of the related Securities Purchase Agreement dated August 19, 2024. The company has also terminated several hydrogen take or pay agreements, significantly reducing its potential contingent liabilities.
The strategic financial moves, including the equity distribution and note conversions, are part of Nikola's ongoing efforts to strengthen its balance sheet and fund its operations focused on the production of electric vehicles and related technologies.
For deeper insights into Nikola's financial position and 20+ additional ProTips, including detailed valuation metrics and growth prospects, explore the comprehensive Pro Research Report available on InvestingPro. This information is based on the latest SEC filing and serves as a factual update on Nikola Corporation's financial activities.
In other recent news, Nikola Corporation has made significant adjustments to its equity distribution and debt terms. The company has updated its equity distribution agreement with Citigroup (NYSE:C) Global Markets Inc., allowing for sales to proceed even if Nikola's common stock is not an actively traded security.
Moreover, the terms of outstanding convertible notes have been amended, enabling note holders to convert their debt at a reduced price, contingent upon Nikola raising at least $65 million from the sale of its common stock.
The company has also reported a gross revenue of $33 million for the third quarter, up from $31 million in the previous quarter. However, due to a higher-than-expected cash burn rate, TD Cowen has maintained a Hold rating on Nikola, reducing the stock price target from $10.00 to $4.00.
Despite financial challenges, Nikola achieved record sales of 88 hydrogen fuel cell electric trucks and a nearly 350% surge in hydrogen dispensing at its stations year-over-year. Analysts from TD Cowen suggest that Nikola's ability to secure additional funding or form strategic partnerships is crucial. These are recent developments that reflect both achievements and challenges for Nikola Corporation.
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