Nikola, once considered a high-flying name in the electric vehicle sector, is reportedly on the brink of bankruptcy. According to unnamed insiders cited in media reports, the electric truck manufacturer is exploring the possibility of filing for Chapter 11 bankruptcy protection following a series of setbacks. The company’s shares plummeted by 28% in after-hours trading on Thursday in response to the news.
Struggling to Stay Afloat
As reported by The Wall Street Journal, sources familiar with the matter indicate that Nikola is actively considering Chapter 11 proceedings as a way to shield itself from creditors. To navigate this crisis, the company has enlisted the help of a law firm and financial advisors. The market reacted sharply, sending Nikola’s stock down to just 57 cents per share.
From Market Sensation to Collapse
Nikola made its public debut in March 2020 via a SPAC merger, quickly becoming one of the most talked-about stocks in the market. In June of that year, the company reached an all-time high of $2,719.70 per share (adjusted for stock splits). However, the rapid rise was followed by an equally dramatic downfall. Founder Trevor Milton stepped down amid allegations of fraud and was later convicted of deceiving investors. At the time, short-seller firm Hindenburg Research, which has since disbanded, raised doubts about the viability of Nikola’s electric trucks. Despite multiple leadership changes, the company has been unable to recover from its financial difficulties.
A significant portion of Nikola’s troubles stems from technical issues. In 2023, the company was forced to recall its electric trucks after a series of battery fires. Sales remained sluggish in 2024, with just 200 hydrogen-powered trucks sold in the first nine months of the year. In October, Nikola warned that it would only remain solvent until the end of the first quarter of 2025.
Last-Ditch Efforts Fail
In an attempt to secure fresh capital, Nikola announced a $100 million stock sale in December. The company also implemented multiple rounds of layoffs. CEO Steve Girsky stated that Nikola had been aggressively seeking strategic partnerships, but these efforts appear to have fallen short. With no viable financial lifeline in sight, bankruptcy now seems like the next inevitable step for the struggling EV maker.
