Why Nikola Stock Crashed 10% This Morning

Core Viewpoint - Nikola Corporation is raising $500 million through new debt, convertible debt, and shares, which may significantly dilute existing shareholders [1][4]. Group 1: Financial Actions - Nikola plans to start with an $80 million sale of convertible notes and may sell an additional $80 million over the next 18 months with investor consent [3]. - The company has filed for a "universal shelf" that allows it to raise up to $500 million in total [3]. - Nikola's current market capitalization is below $400 million, indicating that the planned fundraising could dilute shareholders by more than 50% if convertible debt is converted into shares [4]. Group 2: Shareholder Impact - The share count of Nikola has increased by over 170% in the last 18 months, indicating a trend of dilution [5]. - The company is burning through cash at a rate exceeding $510 million per year, suggesting that even raising $500 million may not sustain operations for another year [5]. - Investors are likely to face further dilution within the next 12 months, contributing to a negative sentiment towards the stock [6].