Why Is Nikola (NKLA) Stock in the Spotlight Today?

Despite a promising announcement from electric truck company Nikola (NASDAQ:NKLA), NKLA stock is well in the red. The company is down nearly 5% this morning, even after announcing a substantial new investment in the business.

Source: Stephanie L Sanchez / Shutterstock.com

So, what do you need to know about Nikola today?

Well, on Monday the electric vehicle (EV) maker announced that Antara Capital has agreed to invest $200 million in Nikola. Antara will purchase $200 million in convertible bonds, set to mature in 2026.  Indeed, the notes offer 8% or 11% interest, depending on the method of payment. Should Nikola pay the bonds back in cash, the interest is 8%, or 11% if the company pays by issuing additional notes.

Nikola reported plans to use the investment to expand its truck manufacturing, enhance its hydrogen infrastructure and for general corporate uses.

Unfortunately, the news has done little for Nikola stock, which is already down 27% year-to-date (YTD). What else do you need to know about Nikola lately?

NKLA Stock Slumps on Antara Investment

Today’s news comes as the latest in Nikola’s 2022 recovery. If you recall, the company suffered a major selloff in late 2021 after its founder, Trevor Milton, was arrested on fraud charges.  Milton was accused of lying to investors about the company’s technological capabilities, earning billions in investments in the process.

However, the company has made strides to improve its public reputation and to live up to previous claims. Nikola has announced a number of promising deals the past few months, with several big-name partners. This includes the likes of Anheuser-Busch (NYSE:BUD) and Thompson Truck Center.

Today’s deal is seemingly the latest chapter in Nikola’s comeback story. Nikola Chief Executive Kim Brady commented on the investment:

“Including the $200 million investment we announced today, Nikola would have had a total cash and liquidity position of approximately $1.0 billion as of March 31, 2022, which we intend to deploy to fund our growth plans. The investment is the next step in solidifying our liquidity position at attractive terms. At the same time, we are strengthening our long-term, institutional investor base across the capital structure, which is reflective of Nikola’s evolving maturity and increasing attractiveness to investors.”

However, whether today’s deal will end up helping NKLA regain lost ground is unclear for now.

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Author: Shrey Dua