<strong>Nikola shares down 15% on secondary stock offering: buy the dip?</strong>

Nikola Corp (NASDAQ: NKLA) is trading about 15% down this morning after the electric vehicles company sold its stock at a deep discount.

Nikola sold its stock at a 20% discount

On Friday, the Arizona-based company raised $100 million via a secondary stock offering that it plans on deploying as working capital. Nikola sold 90 million shares in total for $1.12 each that translates to a 20% discount versus its previous close.

Even at such a low price, Citigroup – its underwriter managed to place roughly 33% of the shares only with its clients. An anonymous private investor, Nikola confirmed, agreed to buy the rest of them.

The Nasdaq-listed firm ended 2022 with about $233 million in cash and cash equivalents. Nikola shares are down 60% versus their year-to-date high at writing.

BTIG downgraded Nikola shares today

In February, Nikola Corp reported just over $222 million of loss for its fourth financial quarter. For later this year, it has plans of introducing a new, hydrogen fuel cells powered long-range electric semitruck.

Today’s announcement, though, was sufficient to put off a BTIG analyst. Downgrading Nikola shares to “neutral” on Friday, Gregory Lewis said in a research note:

He agreed that the capital raise will help in the near term but emphasized the need to lower burn to avoid another cash injection in the future.