Al Root

Shares of Nikola, a battery and hydrogen fuel cell-powered truck maker, plunged after the company announced Wednesday that it and its subsidiaries have filed for Chapter 11 bankruptcy protection.

"Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate," said CEO Steve Girsky. "In recent months, we have taken numerous actions to raise capital, reduce our liabilities, clean up our balance sheet, and preserve cash to sustain our operations. Unfortunately, our very best efforts have not been enough to overcome these significant challenges."

The stock was down by 44% at 43 cents a share, while the S&P 500 and Dow Jones Industrial Average were down about 0.2% and 0.4%, respectively.

The announcement comes days after reports the company was considering a bankruptcy filing, leading to some volatility in the stock price. Nikola shares closed at 44 cents on Feb. 7 and recovered to 77 cents on Tuesday.

At this morning's price, Nikola has a market value of about $40 million.

Nikola said it entered the Chapter 11 process with about $47 million of cash on hand. That is less than the roughly $198 million in unrestricted cash listed in its most third-quarter financial filing with the Securities and Exchange Commission.

That quarterly filing listed about $657 million in liabilities against $1 billion in assets. About half of the assets are represented by plants and equipment.

Nikola plans to sell its assets.

It looks to be the end for a company that played a significant role in the special purpose acquisition company, or SPAC, boom earlier this decade. A SPAC raises money in an initial public offering and looks to merge with a private company. After a merger, the once privately held company will be publicly traded and have the cash raised by the SPAC. The process can be less burdensome for a private company than a traditional initial public offering.

Nikola completed its SPAC merger in mid-2020. Shares traded above a split-adjusted $2,800 apiece, up ninefold from pre-SPAC levels, briefly giving the company a market value comparable to Ford Motor.

Those early days were filled with optimism. But Nikola never generated substantial sales or cash flow. Since 2020, the company used about $3 billion in cash to generate less than $200 million in sales.

Write to Al Root at allen.root@dowjones.com

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February 19, 2025 09:42 ET (14:42 GMT)

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