Nikola stock slides on $100 million stock offering

Yahoo Finance Live anchors Rachelle Akuffo discuss the decline in stock for Nikola.

Video Transcript

RACHELLE AKUFFO: Let's also check in on shares of electric truck maker, Nikola, after the company said it will offer up to $100 million worth of stock to the public via traditional secondary offering. Now this is an interesting one here. Nikola, we talk about it, but it's sort of tends to be in the background sometimes here Brad.

BRAD SMITH: Well for good reason. This is certainly one of the larger fall from graces. And after this company had made their debut, there was a lot of fanfare around what they could do in the semi-space, the type of more sustainable vehicle and truck that they were trying to put on the roads, as well, however then became the subject of one particular short research report that had come out. And really put out allegations which were ultimately true, and led to a conviction of their founder, Trevor Milton. And then just an entire revamping of how this company would need to operate.

And what was actually true about its marketing materials as it was even securing funding and going out to investors. And so the misleading and the fraudulent claims that had come forward about what the company, and how fast the company was going to be able to achieve some of the goals that it set forth, or at least pitched to the street, that really was the cloud over this company. And it has continued to be, and that's shown up in the stock price.

And our viewers are just seeing it there on the screen with the rise and then fall of Nikola over the years as well. And so just, I think, within the stock offering, the move that you're seeing here today, that's typical with this dilution of the existing shares that are out there. And so now the stock reacting to that announcement here on the day down by about 14 and a half percent.

RACHELLE AKUFFO: They closed at an all-time low on Thursday. They're expected to sell that stock at a 20% discount. So obviously in a tough position at the moment. And how much they were planning on raising, instead, going with the share splitting as a as a strategy. They're expecting to sell about 29.9 million shares to the public at that offering price.

Nikola has been obviously plagued with a lot of issues. It's really trying to compete in a space in electric freight that obviously we have Tesla trying to make that move, still waiting to see the fruition of that with their Semis. But Nikola here with really a chance to position itself and not seeming to be able to take advantage of that.