Nikola Stock Plummets as Board Makes a Harrowing Decision.

Nikola’s Stock Takes a Hit as Company Announces Reverse Stock Split

Nikola Corporation (NASDAQ: NKLA), the electric truck maker, has seen its stock price fall sharply following the announcement of a 1-for-30 reverse stock split scheduled for next week. As of Thursday morning, shares were down about 23.3% from the previous day’s closing price.

This news may come as a disappointment to shareholders, but the decision to move forward with the reverse stock split was not unexpected. At the company’s annual meeting on June 5, shareholders approved a proposal allowing for a reverse stock split at a ratio between 1-for-10 and 1-for-30. The board of directors ultimately chose to go with the most aggressive option, a 1-for-30 split, which was revealed in a recent Securities and Exchange Commission (SEC) filing.

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The reverse stock split will take effect immediately after the U.S. markets close on June 24. While this move may help Nikola maintain compliance with Nasdaq’s minimum share price requirement of $1, it is generally not seen as a positive sign. Reverse stock splits are often done when a company’s share price falls below $1 for an extended period, indicating underlying issues with the stock.

Investors may also be wary of recent events in the electric vehicle industry, such as Fisker’s bankruptcy filing, which could be contributing to the downward pressure on Nikola’s stock. With uncertainty surrounding the company’s future performance, some investors may be cautious about investing in Nikola at this time.

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If you’re considering investing in Nikola or other stocks, it’s important to do your research and consider all factors before making a decision. The Motley Fool Stock Advisor team, for example, recently identified the 10 best stocks for investors to buy now, with the potential for significant returns in the future. While Nikola may not have made the cut, other opportunities exist for investors looking to grow their portfolios.

Ultimately, the decision to conduct a reverse stock split raises questions about the company’s outlook and investor confidence. As always, it’s crucial to stay informed and make decisions based on your own financial goals and risk tolerance.

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