- General
- November 29, 2020
- 4 minutes read
Nikola’s Lockup Expiry Nears
Nikola, the publicly-traded electric carmaker that’s notably still in the stage of developing its product and is reeling from recent…
Nikola, the publicly-traded electric carmaker that’s notably still in the stage of developing its product and is reeling from recent scandals that include fraud accusations, is set to reach its 6-months lockup expiry counting from June on the 30th of this month November.
The expiry will release a large block of shares for trading, estimated to be about 130 million additional shares to its current free float of about 171 million shares, Bloomberg reports. With that, the share price of Nikola could fall further after having fallen over 70% from its peak price of $93.99 to $27.93 as of trading close this Friday, depending on if shareholders decide to sell their previously locked-up shares en masse.
Notably, Nikola’s founder and former chief executive Trevor Milton who was ousted from the company this September after fraud accusations will now be free to offload his shares at choice. He had previously said in a tweet that he has no plans to do so but that was before he was ousted from the company he founded.
As its lockup expiry nears, Nikola is also nearing the deadline to complete a deal with the automaker General Motors, which this September agreed to provide production services for Nikola in exchange for an 11% equity stake that’ll be locked up through 2025.
As of when the deal was reached, an 11% stake in Nikola amounted to $2 billion on paper, but with the company’s recent stock drop now sums up to about $1.2 billion, whereas the value drop may lead General Motors to adjust the terms of its deal or even scrap the deal altogether. Nikola’s current CEO Mark Russell has, however, assured that talks with GM are still ongoing in a Tuesday interview with CNBC.
Nikola is down sharply from its peak market cap of over $34 billion to now at $10.7 billion even as other publicly-traded electric carmakers like Nio, Xpeng, and Tesla have soared in recent months. There lies a difference between the aforementioned names and Nikola however, being that Nikola has not begun making and delivering vehicles while the others have long done so.
Photo credit: Nikola Corp
