No signs of panic as Nikola gets 2nd Nasdaq delisting warning

Nikola Corp.’s languishing share price prompted the Nasdaq to threaten the electric truck maker with delisting its stock for the second time in eight months. But don’t look for the company to panic.

The quickest way to remove the threat is a reverse stock split, in which a company issues one new share for a multiple of outstanding shares, usually one for 20 or more. But without positive news driving such an action, Nasdaq scrutiny could continue.

“It doesn’t really change anything, except [it creates] the higher share price,” Nikola CEO Steve Girsky said in a December interview with FreightWaves. [A reverse split] hasn’t come up at the board. It doesn’t mean it won’t come up. When we look at the top five things we’re working on, that’s not one of them.”

180 days to get share price up

Nikola has 180 days, or until July 17, to get its share price above $1 for 10 consecutive trading sessions. Failing that, it could petition for an extension before any action would be taken. The Nasdaq issues delisting warnings when a stock trades below its $1 threshold for 30 consecutive days. Nikola has traded below $1 every session since Dec. 5. It closed Friday at 65 cents.

The Nasdaq started the clock on a Nikola delisting in May. But the share price recovered from a low of 54 cents on June 5 to $3.40 on Aug. 4, meeting the listing requirement.

“Stocks are connected to companies like rubber bands,” Girsky said. “Sometimes they get ahead, sometimes they get behind. We can only control what we control, which is the performance of the company and satisfying our customers.”

Reverse splits can hasten a business demise

A host of transportation startups have used the tactic to artificially bolster their share prices. Sometimes, it backfires and contributes to business failure.

Autonomous trucking developer Embark Trucks, electric truck…