Electric truck manufacturing start-up Nikola Corporation (NASDAQ:NKLA) saw its stock rocked in after-hours trading Monday. Immediately after the company filed notice with the SEC of insider shareholders' intent to sell in excess of 53.4 million shares onto the market, Nikola's stock price first plummeted more than 12%, before gaining back almost all those losses.
After close of trading Monday, Nikola filed an S-1 form with the SEC, outlining how certain "selling securityholders" intend to sell, "from time to time ... up to 53,390,000 shares" of Nikola common stock, as well as an additional 890,000 shares that "may be issued upon exercise" of certain private warrants (to purchase shares) that are also up for sale.
All of the above shares would be sold by insider shareholders, and Nikola would receive no money from these sales.
Nikola also intends to issue 23.9 million shares upon the exercise of the private warrants already mentioned, as well as certain "public warrants." The company would receive cash for these warrants if they are exercised -- but only about $11.50 each, which is a lot less than the $68.45 share price that Nikola stock closed at Monday.
Between the negative "signal" investors may believe they're getting from insiders selling out and the likely dilution of Nikola's existing shareholders, it's not surprising that investors initially reacted by selling off the stock last night.
Whether they'll recover from the shock today remains to be seen. Shares of Nikola are down over 3% in early trading Tuesday.