Nikola Fell Hard -- and This Ad-Tech Stock Plunged Even More Thursday

The stock market had a solid day on Thursday, with only the Dow Jones Industrial Average (^DJI -0.11%) failing to join in the rally that the Nasdaq Composite (^IXIC 0.10%) and S&P 500 (^GSPC 0.02%) enjoyed. The Nasdaq in particular jumped sharply, lifted by the latest news on the artificial intelligence (AI) trend from a giant in the semiconductor industry.

Data source: Yahoo! Finance.

Yet beyond AI, there were several weak areas of the stock market on Thursday. In particular, a few stocks dropped more than 20%, including popular electric vehicle (EV) stock Nikola (NKLA -2.41%). And among the really big decliners on the day, Digital Turbine (APPS -1.03%) led the way lower, as the advertising-tech specialist failed to keep up with high expectations from its shareholders.

Nikola powers down

Shares of Nikola dropped more than 20% on Thursday. The EV company has drawn a lot of attention in the past couple of years, but its latest news revealed that a big part of its story is at risk of coming to an end.

Nikola is listed on the Nasdaq, and the company responsible for managing that stock market exchange informed the EV maker that it has fallen out of compliance with the requirements that the Nasdaq imposes on the businesses that list on its exchange. In particular, the Nasdaq requires that companies keep a stock price of at least $1 per share, and if a stock falls below that level for 30 business days, the exchange has the right to delist the company's shares.

To be clear, Nikola has plenty of time to get back into compliance. The notice is largely a technicality, starting a six-month window during which Nikola shares must rise to $1 or more for at least 10 straight business days.

One popular way that many companies deal with such situations is to execute a reverse stock split, reducing their number of outstanding shares but making each new share represent a larger fraction of the overall business.

The notice highlighted the fact that Nikola's business remains under extreme pressure. Regardless of how it resolves the Nasdaq compliance issue, it will need some good fortune in order to find a way forward in a challenging industry environment.

Digital Turbine stops spinning

Shares of Digital Turbine did even worse, plunging 43% on Thursday. The ad-tech company's fiscal fourth-quarter financial results for the period ended March 31 showed that the business appears headed in the wrong direction.

The numbers were discouraging. Revenue dropped 24% year over year to $140 million. Adjusted net income of $13.6 million was down by more than two-thirds from year-ago levels, working out to $0.14 per share. That closed a 2023 fiscal year that similarly featured declines in sales and profits.

CEO Bill Stone tried to rally shareholders. The executive said that macroeconomic headwinds have hurt overall spending on advertising, but the company sees those trends starting to stabilize.

Yet it faces two problems. First, other players in the ad-tech space have seen more dramatic rebounds. And in its guidance, Digital Turbine projected that revenue would remain at around $140 million to $145 million in the fiscal first quarter, with adjusted earnings falling to between $0.11 and $0.13 per share. Until shareholders see more evidence of a real turnaround, the stock could remain under pressure.