Please ensure Javascript is enabled for purposes of website accessibility

Why Nikola Stock Fell Today

By Howard Smith - Mar 18, 2021 at 1:57PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A large shareholder is cutting its stake in the electric-vehicle maker.

What happened

Shares of electric-vehicle (EV) start-up Nikola (NKLA -7.96%) dropped Thursday after the company disclosed that a large shareholder will be cutting its stake. As of 1:30 p.m. EDT, the stock was down about 8%. 

So what

In an SEC filing, Nikola revealed that South Korea's Hanwha Corp. will be reducing its stake in the EV company by about half. Through its Green Nikola Holdings subsidiary, Hanwha has an approximately 5.6% stake in Nikola, with more than 22 million shares. The company plans to sell slightly over 11 million of those shares.

Nikola Tre semi truck on a bridge

Nikola Tre semi truck. Image source: Nikola.

Now what

The shares won't necessarily be sold right away. The plan will expire at the end of 2021, unless the shares are sold prior to that deadline. The reduction in ownership is also not the end of the relationship between Nikola and Hanwha. According to Reuters, "A Hanwha Group spokesperson said it will use the proceeds to invest in hydrogen-related businesses, adding that the potential sales is not an end of cooperation with Nikola."

Nikola has also been raising new capital recently. It filed to sell shares to raise $100 million earlier this month. Nikola is in the process of commissioning prototype vehicles at its Arizona manufacturing plant. The company said in a separate SEC filing that proceeds from its recently announced share sale may be used "to complete our Arizona manufacturing facility, develop commercial scale BEV and FCEV Class 8 trucks and develop hydrogen station infrastructure."

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Nikola Corporation Stock Quote
Nikola Corporation
NKLA
$5.90 (-7.96%) $0.51

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
345%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.