Electric semi-truck maker Nikola is essentially fighting to stay afloat. While the company retains $385 million cash on hand as of March 31, 2022, the company is seeking the necessary votes from shareholders to increase authorized share count. This step is crucial so that the automaker can raise funds in the future. You may recall former Nikola CEO Trevor Milton, as he came under scrutiny and subsequent indictment for securities fraud and lying about essentially the entire business. The most incriminating evidence was the video of their hydrogen-powered semi, which was claimed to be a working prototype, was actually just rolling down a hill.
What's ironic about the company's current situation is that the former CEO is the one who is blocking the proposed plan to issue more stock to raise more capital. Milton still owns a total of 20% of the company, and Nikola needs the votes of 50% of shareholders for their "Proposal 2" to pass.
Needless to say, the company has gone down every avenue and exhaustedly issued press releases urging shareholders to vote to gain the necessary tally. According to Nikola, as of July 26, they are less than 1 million shares away from being voted in favor of the proposal in order for it go through. They have been seeking the votes since the annual shareholder meeting on June 1 and has readjourned twice, extending the deadline to vote as many times too. They have issued a total of 17 press releases and fired off nearly as many Tweets; so many so that their investor page just looks like a desperate plea at this point:
Nikola is burning about $180 million of cash every quarter, compared to revenue of $1.9 million in Q1 2022; they delivered a total of 11 trucks in the first quarter of 2022. The company is set to report Q2 earnings on August 4. While they have another option to raise capital, via an equity line from Tumim Stone Capital worth $409 million, Nikola feels it is in the best interest to raise from issuing more stock.
Personally, I hope they do get the approval from shareholders -- not only to stick it to Milton, but so that they can stay afloat and have a chance to become known more for their actual trucks than concept art.
