What Happened?
Shares of electric vehicle manufacturer Nikola (NASDAQ:NKLA) fell 48.4% in the afternoon session after reports suggest the company may be preparing to file for bankruptcy. The sources also noted that "the company was working with advisors to explore options to restructure its debt." The company has not confirmed or denied these claims.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Nikola? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Nikola’s shares are extremely volatile and have had 90 moves greater than 5% over the last year. But moves this big are rare even for Nikola and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 15 days ago when the stock dropped 21.4% as rumors swirled about CEO Stephen Girsky's potential departure, fueling fears of an impending bankruptcy. Fred Lambert, editor-in-chief of tech site Electrek, posted on X (formerly Twitter), "The bankruptcy filing is already in the hands of lawyers." As of now, Nikola has not issued an official statement addressing the speculation.
Nikola is down 62.9% since the beginning of the year, and at $0.48 per share, it is trading 98.5% below its 52-week high of $31.20 from March 2024. Investors who bought $1,000 worth of Nikola’s shares 5 years ago would now be looking at an investment worth $1.54.
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