Nikola, once dubbed the “second Tesla,” now faces bankruptcy as financial struggles mount.
The Wall Street Journal reported on Thursday that Nikola plans to file for bankruptcy protection in the near future.
Following the news, Nikola’s stock price fell 4.41% in regular Nasdaq trading and dropped nearly 24% in after-hours trading, closing at $0.57 per share.
A Nikola spokesperson said the company is assessing its financial situation and liquidity needs while exploring various options for economic restructuring.
Nikola, founded in 2014 in Utah, took its name from 19th-century electrical scientist Nikola Tesla.
Unlike Tesla, Nikola focused on the electric truck market using hydrogen fuel cells.
Heavy-duty trucks require long-range capabilities while carrying heavy loads, making traditional battery-powered solutions less suitable.
At its peak, Nikola’s market capitalization surpassed $30 billion, briefly exceeding Ford’s $28.8 billion valuation.
In 2023, a federal court in Manhattan ruled that Nikola had deceived investors by releasing manipulated footage of non-functional or non-mass-produced vehicles. The court sentenced its executives to four years in prison for fraud.
Nasdaq delisting procedures begin if a stock remains below $1 for a prolonged period.
Nikola’s stock has remained under $1 since reaching $0.84 on January 23, putting it at risk of being removed from the exchange.
