Nikola Corp (NKLA) stock sank 10% at the time of writing after the company announced it’s selling more shares to raise money to boost the production of its hydrogen-powered electric vehicles. Generally, investors don’t like to see companies raise money through equity offerings because it dilutes the value of the existing shares. It also signals that a company’s operations alone are not enough to sustain it.
The firm agreed to sell up to $160M in senior notes that can be converted into shares, with the first $80M expected to bring in about $74.3M after fees. Nikola also filed to sell up to $500M in shares and other securities.
Even though Nikola reported a smaller loss last quarter, its operating cash has almost halved since the end of 2023, and it’s still losing money. The company is focusing on expanding its reach across North America, with repeat orders from customers like Walmart Canada.
Insider Activity
Despite investor pessimism, when looking at insider activity, there seems to be quite a bit of buying. In fact, insiders have purchased $540,000 worth of shares in the past three months. As a result, confidence from within appears to be high, as the Insider Confidence Signal for NKLA stock is positive and above the sector average, as shown in the picture below:
Is Nikola a Buy or a Sell Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on NKLA stock based on two Buys, three Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After an 84% decline in its share price over the past year, the average NKLA price target of $16 per share implies 119.93% upside potential.
