Shares of heavy-duty electric vehicle startup, Nikola Corp (NASDAQ:NKLA) continue to decline Monday as the automaker contends with recalls leading to lower projected earnings.
Over the last month, the company's stock has experienced a significant decrease of approximately 47%. The primary cause of this decline can be attributed to a recent fire incident that occurred nearby, leading to the voluntary recall of more than 200 vehicles. As a result, the company has taken the necessary step of temporarily suspending the sale of new battery electric vehicles in order to effectively address these concerns.
Besides the recall, Nikola has revealed intentions to execute a registered direct offering that will include senior convertible notes. This offering has the potential to generate a maximum value of $325 million, resulting in an approximate net income of $124.5M for the company. It's worth highlighting that holders of these shares might have the opportunity to participate in reselling the specific shares obtained through note conversion, and it's important to emphasize that Nikola will not gain any earnings from these transactions.
Analyzing the earnings growth trajectory, NKLA demonstrated a decrease in growth with a negative rate of -2.49% in the previous year, followed by a notable increase at +26.91% in the current year. However, the earnings growth outlook indicates an anticipated decline, with a projected rate of -17.12% over the upcoming five years.
Shares of NKLA are down 7.25% in afternoon trading Monday.