By Abhirup Roy
SAN FRANCISCO (Reuters) -Electric truck maker Nikola Corp may execute a reverse stock split if its stock does not comply with Nasdaq’s minimum bid price requirements within a certain period, its chief executive Michael Lohscheller said on Thursday.
Nikola, which closed at about 57 cents on Thursday as it battles mounting losses, high cash burn and sluggish demand for its battery-powered trucks, said last week it received a delisting notice from the stock exchange.
Nasdaq requires shares trade above $1 and sends a notice if one trades below that mark for 30 consecutive business days.
Companies then have 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.
If Nikola cannot comply in those periods, the company can execute the reverse stock split, subject to a shareholder vote, to move its shares above the $1 mark, Lohscheller said.
A reverse stock split consolidates the number of existing shares into fewer shares.
“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 that was followed by a 1% price rise in after-market trading. “We have tough decisions to make as we navigate through challenging times.”
Investors have focused on cash reserves at Nikola and other electric vehicle makers amid fears that slowing sales could push the companies to pursue more share sales to raise funds.
Cash burn in the first quarter was $240 million, compared with $200 million per quarter in 2022, Nikola said last month.
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.”
Nikola said last month it would pause production to focus on hydrogen fuel cell trucks and build battery electric trucks only to order going ahead.
(Reporting by Abhirup Roy in San Francisco; Editing by Jamie Freed)
