NKLA Stock Collapses from $2K to $0.4 as Nikola Goes Bankrupt
The shares of electric vehicle producer Nikola Corporation have been declining since 2024 and crashed 50% lower today, as they filed for bankruptcy.
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Stock Plummets as Nikola Files for Chapter 11
Nikola Corporation (NKLA) saw its stock price nosedive by more than 50% after the market opened today, plunging from $0.79 to an early low of $0.36. The stock later stabilized around $0.45 following the company’s announcement that it had filed for Chapter 11 bankruptcy protection in Delaware. This filing marks a dramatic and unfortunate turn for the once-promising electric vehicle (EV) manufacturer, which had been celebrated as a key player in the future of sustainable transportation.
Nikola’s stock had once soared to nearly $2,000 in June 2020, a meteoric rise fueled by a 700% surge within the first half of that year. The company went public through a SPAC merger in early 2020, attracting immense investor enthusiasm. However, after the initial excitement, the stock experienced a significant reversal in the latter half of 2020, losing the bulk of its gains as the company faced increasing scrutiny. The decline has remained persistent over the years, with NKLA shares opening 2024 at approximately $25 before crashing to just over $1 by the year’s end. By 2025, the stock had already fallen below $1, and last night, shares dipped below $0.40, cementing a prolonged downward trajectory.
Financial Struggles and Mounting Challenges
Nikola’s decision to seek bankruptcy protection comes as the company struggles with mounting financial difficulties and operational challenges. Court filings indicate that Nikola holds assets valued between $500 million and $1 billion, while its liabilities range between $1 billion and $10 billion—an alarming discrepancy that underscores its overwhelming debt burden. Diminishing cash reserves, underwhelming sales, and growing operational costs have exacerbated the company’s financial instability, making it impossible to sustain operations.
Earlier this month, The Wall Street Journal reported that Nikola was at high risk of bankruptcy, further raising concerns about its viability. The company is now seeking court approval under Section 363 of the U.S. Bankruptcy Code to conduct an auction and sale of its assets. This move aims to salvage any remaining value as Nikola struggles to meet financial obligations, including payroll and other operational costs.
Leadership Scandals, Recalls, and Market Weakness
Nikola’s downfall has been accelerated by a series of leadership scandals, product issues, and declining investor confidence. Founder Trevor Milton was ousted and later convicted of fraud for allegedly deceiving investors about the capabilities of the company’s first truck model. His departure, coupled with an aggressive wave of short-selling, significantly eroded trust in the company’s future.
Beyond leadership troubles, Nikola has faced major product setbacks. In 2023, the company was forced to recall its battery-electric trucks due to battery fire risks, dealing a severe blow to its already struggling sales. The company also encountered a weak market for its electric and hydrogen-powered semi-trucks, making it difficult to gain traction despite the increasing industry focus on clean energy solutions.
With financial troubles mounting, operational challenges persisting, and investor confidence at an all-time low, Nikola’s bankruptcy filing signals the end of a once-promising venture. While the company’s assets may still hold some value, its legacy serves as a cautionary tale of rapid growth, corporate mismanagement, and the volatile nature of the EV industry.
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