Investing.com -- Shares of Nikola Corporation (NASDAQ:NKLA) tumbled 21% in after-hours trading on Thursday following reports that the company is considering bankruptcy. The Phoenix-based hydrogen-truck maker, once briefly surpassing Ford Motor (NYSE:F) in market valuation, is said to be exploring options with its law firm Pillsbury Winthrop Shaw Pittman, which may include a sale or restructuring through bankruptcy, according to sources close to the matter.
The steep decline in the company’s stock comes as the Wall Street Journal reported on the potential financial peril facing Nikola. The company, known for its ambitious plans to revolutionize the trucking industry with hydrogen fuel cell technology, has been assessing its financial position and liquidity needs. A Nikola representative stated that they are evaluating various options, including financing as part of a financial restructuring.
This news marks a significant downturn for Nikola, which has faced scrutiny and challenges since its public listing. The potential move towards bankruptcy indicates severe financial distress and has clearly rattled investors, leading to the sharp drop in the stock price.
As the company navigates through these financial difficulties, the market’s reaction reflects the heightened uncertainty surrounding Nikola’s future. While the company has not confirmed the bankruptcy filing, the exploration of such measures suggests that Nikola’s path forward may be fraught with significant hurdles.
Investors and industry watchers will be closely monitoring the situation as it unfolds, with many awaiting further details on the company’s strategic plans to address its financial challenges. The next steps for Nikola could be crucial in determining its ability to sustain operations and realize its vision for the transportation sector.
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