According to reports, American truck manufacturer Nikola Motor announced last week that it would lay off 135 employees. Despite delivering 88 fuel cell trucks in the third quarter, the company continues to struggle with profitability, leading to a decline in its stock price.
Although Nikola was the only manufacturer to launch fuel cell trucks in the last quarter, its financial situation is quite poor. Prior to this round of layoffs, Nikola had laid off 100 employees in November 2022 and 270 employees in June 2023. By the end of 2023, former CEO Trevor Milton was sentenced to prison for fraud.
In addition to the layoffs, another sign of Nikola's troubles is its stock price, which currently has the third-highest short-selling rate on Wall Street, reaching 29%.
In June of this year, Nikola executed a reverse stock split in hopes of raising its stock price to maintain its listing on NASDAQ, which requires a minimum share price of $1 for 30 consecutive days. Before the split, the stock price was $0.30 per share.
After announcing the delivery of 88 fuel cell trucks last quarter, Nikola's stock price briefly rose by nearly 20%, only to fall 6.5% the following day. The stock has generally been on a downward trend since then. Reports estimate that Nikola's manufacturing cost per truck exceeds $1 million, while revenue stands at only $380,000.
Clearly, this is not a sustainable business model. Nikola's sale and leaseback of its Phoenix headquarters provided much-needed short-term capital, but this move may come at a heavy long-term cost.
In the second quarter of this year, Nikola reported a loss of over $133 million, but it maintained a relatively positive outlook due to increased sales. The company stated in a press release, "We expect our revenue to grow alongside an increase in vehicle sales."
Despite ongoing setbacks, CEO Stephen Girsky remains optimistic about the company's future, stating, "Although the overall market conditions are challenging, Nikola will continue to focus on our mission to create solutions for a zero-emission world, and we are making progress toward that goal."
