American electric truck builder, Nikola Corp (NASDAQ:NKLA) said Thursday that the company may need to execute a reverse stock split if its stock does not comply with Nasdaq's minimum bid price requirements within a certain period.
Nikola, whose stock closed at $0.57 on Thursday, has been battling mounting losses, high cash burn and sluggish demand for its battery-powered trucks. The company announced last week that they received a delisting notice from the Nasdaq stock exchange. The exchange requires shares to trade above $1 and sends a notice if one trades below that mark for 30 consecutive business days.
From that point, the company has a 180-day period within which the stock has to trade above $1 for at least 10 consecutive days to comply with the rules, although a second 180-day period can be granted if it meets other requirements.
A reverse stock split consolidates the number of existing shares into fewer shares, which CEO Michael Lohscheller said may be needed to bring the share price into compliance.
"We believe we will be able to regain Nasdaq compliance and will work to ensure Nikola common stock is not delisted," he said in a webcast to answer shareholder questions. "We have tough decisions to make as we navigate through challenging times."
Lohscheller on Thursday urged shareholders to vote at its annual meeting next week in favor of increasing the number of shares the company is allowed to issue.
The truck maker said earlier that "without these additional shares, Nikola's ability to continue its ongoing operations and objectives, including Nikola's need for capital, will be out of reach."
Shares of NKLA are up 3.34% in afternoon trading on Friday.