Nikola Files for Bankruptcy, Plans Asset Auction
Key Takeaways:
* Electric vehicle startup Nikola (NKLA) has filed for Chapter 11 bankruptcy.
* The company intends to conduct an asset auction subject to court approval.
* Nikola once surpassed Ford Motor's market capitalization despite not having sold any trucks, but its vehicles faced widespread recalls and its founder was convicted of fraud.
Bankruptcy Filing
Nikola announced on Wednesday that it has filed for Chapter 11 bankruptcy and plans to move forward with an asset auction pending court authorization. According to CEO Steve Girsky, the hydrogen truck manufacturer and the broader EV industry have encountered challenging market and economic conditions. Despite efforts to raise capital and sustain operations, the company has been unable to overcome these obstacles.
Nikola's Rapid Rise and Fall
Nikola's bankruptcy filing marks the culmination of a tumultuous period. The company went public in 2020 without having sold any vehicles and briefly achieved a market valuation exceeding that of Ford Motor. However, the company faced a massive vehicle recall in 2023, followed by a four-year prison sentence for founder Trevor Milton for misleading investors.
Nikola currently holds approximately $47 million in cash for bankruptcy proceedings. If the court approves an auction, parties will have the opportunity to bid on Nikola's assets. Nikola's stock plummeted nearly 40% during intraday trading on Wednesday, falling from $21.18 a year ago to its current price of approximately 47 cents per share.