Electric truck manufacturer Nikola (NKLA 7.23%) went public with fanfare and a tank full of hope fuel. Those days are in the rearview mirror now, though, as the heady days of EV hype and pandemic panic-buying have given way to fear and loathing of publicly listed businesses perceived to have zombie-like characteristics.

Zombie or not, Nikola is unfortunately a member of the never-been-profitable club, and, as I'll touch upon momentarily, the automaker's capital position isn't ideal. Perhaps this didn't matter much when Wall Street favored Nikola for a hot minute, but the recovery prospects aren't stellar.

Nikola's short-lived short squeeze

In June 2020, the conditions were right for Nikola stock to zoom to $66, albeit only for a brief moment. EV start-ups were the toast of the town, and truck electrification felt like a fresh idea with seemingly infinite profit potential.

It was an exciting narrative while it lasted. From its peak of around $66 three years ago to today's share price of $1.38 -- a 98% drawdown, if you can believe it -- Nikola stock broke hearts and lightened accounts as it turned a $1,000 investment into a mere $20.

Granted, there was a share-price pop earlier this month as Nikola stock quickly doubled in price. There are several proposed explanations for that rally, though one of them is a short squeeze, and serious investors shouldn't assume that another squeeze is imminent.

Another likely contributing factor was the rally in the tech-heavy Nasdaq Composite index; as the old saying goes, a rising tide lifts all boats (whether those boats deserve it or not, I'd add). Additionally, there was the adjournment of Nikola's annual shareholder meeting, which is set to reconvene on July 6.

Some of Nikola's investors may have felt relieved that the company didn't have enough support (during the postponed meeting, at least) to approve Proposal 2, which would permit Nikola to increase its number of stock shares. The automaker alarmingly acknowledged that, "Without these additional shares, Nikola's ability to continue its ongoing operations and objectives, including Nikola's need for capital, will be out of reach."

Cash burn, delisting worries, and friction with the founder

That "ability to continue" acknowledgment, along with the specter of dilution hanging heavy over the current shareholders, certainly don't bode well for Nikola's investors. Still, with 77% of shares voted through June 6 being in favor of the Proposal 2 and its share-printing provision -- and with Nikola pushing hard for its passage -- it seems that the proposal has a fighting chance of passing at the next go-round. This may occur even as the company's founder, Trevor Milton, expressed his opposition to Proposal 2 with the declaration, "The company does not need new shares; they need new leadership."

Speaking of Nikola's leadership, apparently they've determined that getting the company's annual cash "usage" (i.e., cash burn) below $400 million by 2024 is a worthy objective. Maybe it is, but even if Nikola achieves that goal, it may be too little, too late. The company's cash and cash equivalents (including restricted cash) dwindled from $385.12 million in Q1 2022 to just $206.32 million in Q1 2023; clearly, Nikola's spending habits need to be kept in check before the company checks out.

Finally, there's the Nasdaq exchange's delisting threat to contend with. Earlier this year, the Nasdaq warned Nikola that it was out of compliance with the exchange's listing requirements; specifically, Nikola stock closed below $1 for 30 or more consecutive business days. The stock has since risen above the $1 threshold, but that confluence of events would probably be difficult to repeat if Nikola stock falls back below $1.

Of course, Nikola could always invoke the distressed-company playbook and enact one or more reverse stock splits in order to regain/maintain compliance with the Nasdaq exchange's listing requirements. That's a quick fix that does nothing to solve Nikola's fundamental issues (widening net loss, cash burn), though, so unless conditions change dramatically for the better, don't expect the next three years to be much better than the past three for Nikola stock.