Shares of electric truck maker Nikola (NKLA.O) fell more than a quarter of their value on Friday after the U.S. company named its fourth CEO in as many years and reiterated for the third time this year its doubts about continuing as a going concern. Chairman Stephen Girsky, a former Normal Motors (GM.N) government, will instantly take over from Michael Lohscheller, who is stepping down due to a household well-being matter, the corporate mentioned.
The move comes as the Phoenix-based company, which started delivering battery-electric semis this yr constructed at its Coolidge, Arizona, plant, struggles to fulfill its enterprise targets and wrestles with several operational difficulties. The corporate has already lost billions of dollars because of its ill-fated venture into a garbage truck and the costly decision to shift its focus to hydrogen fuel-cell technology.
Amid the turmoil, Nikola has issued a series of warnings about its financial stability and is amid a review by the Securities and Exchange Commission and the Justice Department. CEO Mark Russell told traders on a second-quarter earnings call this month that the firm has been working closely with regulators and would continue to do so. But he acknowledged that the ongoing reviews have been “a potential distraction” for the company, which has spent much of its newest funding period trying to stay on track to start producing and shipping the Tre electric semis.
In its latest update, the company reported a narrower loss than the final yr because it decreased manufacturing of the vehicles within the April-June interval to preserve costs and help its gross margins. However, the company still expects to incur another $80 million in legal and regulatory expenses this yr, including fines from the SEC and Justice Department over claims made by a short-seller.
In addition to its legal battles, the company has been trying to cut costs by laying off workers and liquidating property in recent months. Nikola also has slashed production and sales goals for the zero-emission trucks, designed to haul waste and deliver freight around the nation, shifting its focus to heavy-duty electric truck manufacturing and hydrogen fueling stations. Analysts said the firm has a long way to go before it turns a profit. They added that it needs to build and deliver thousands of its vehicles to break even. The stock has slumped a lot this yr, shedding over half of its worth since Trevor Milton stepped down as president and chief executive officer in September 2020 after being accused of fraud and misleading investors. The stock sank to a low of $0.52 this June, the lowest in the Nasdaq listing, and the company has been threatened with delisting. This yr, it raised nearly $26 million by selling shares and debt. Its market cap has dipped to less than $326 million. Investors need more confidence that the company can deliver on its promises, particularly after the latest management shake-up.
