Nikola Shares Plunge On Bankruptcy Concerns

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(RTTNews) - Shares of Nikola Corp. (NKLA) tumbled nearly 33% on Friday amid reports that the electric truck maker is considering a bankruptcy filing.

According to The Wall Street Journal, the company has been working with law firm Pillsbury Winthrop Shaw Pittman to explore restructuring options, including a potential sale or Chapter 11 protection.

Nikola has faced significant challenges since going public in 2020, including a mass vehicle recall in 2023 and the conviction of its founder, Trevor Milton, for fraud, resulting in a four-year prison sentence. In January, Bloomberg reported that the company was seeking ways to address its financial struggles, including a possible sale.

Sources indicate that Nikola is preparing for a potential bankruptcy filing to protect itself from creditors as it grapples with a cash crunch. However, a company representative stated that Nikola is evaluating multiple options, including securing financing as part of a financial restructuring.

The report highlights the broader struggles of electric vehicle startups, many of which are facing high production costs and financial instability. As Nikola explores its next steps, investor concerns continue to mount over the company's long-term viability.

NKLA is currently trading at $0.48 down 36.05 percent or $0.27 on the Nasdaq.