Sunday, February 25, 2024
Stock Market

NKLA Stock Alert: Nikola Receives Nasdaq Non-Compliance Notice

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The countdown has officially started for Nikola (NASDAQ:NKLA), as Nasdaq provided the electric truck company with a non-compliance notice on Jan. 19 due to its shares closing below $1 for 30 consecutive trading days. Now, NKLA stock will have 180 calendar days, or until July 17, to close at or above $1 for at least 10 consecutive business days. NKLA has traded below $1 since Dec. 5.

If Nikola is unable to achieve Nasdaq’s $1 requirement by July 17, it may be eligible for another 180-day calendar extension as long as it provides Nasdaq with written notice of its compliance plan and meets all other Nasdaq inclusion policies. Nikola is at risk of being delisted if it is unable to achieve the $1 requirement by the end of the second compliance period, although it may be eligible for a hearing in front of Nasdaq’s Hearings Panel to discuss other remedies, such as a compliance period extension.

NKLA Stock Nikola Receives Nasdaq $1 Non-Compliance Notice

This is the second time that NKLA stock has received a $1 non-compliance notice. Nikola received the notice last May, although its shares were able to close back above $1 for an extended period of time and regain Nasdaq compliance.

One of the ways to regain the $1 level is a reverse split, although this action is generally frowned upon by shareholders, as it signals that a stock’s price has fallen too much.

“It doesn’t really change anything, except [it creates] the higher share price,” said CEO Steve Girsky in regards to a reverse split last December. “[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.”

Mullen Automotive (NASDAQ:MULN) is an example of a company that has been hammered by reverse splits in order to regain $1. In 2023, the company initiated reverse splits in a cumulative ratio of 1-for-22,500. During that year, MULN stock plunged by over 99%.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

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