Why Nikola Corporation Stock Slumped 6% on Wednesday

Investors have to now not at all gratified with management’s compensation equipment.

What happened

Shares of electrical- and gas cell-powered truckmaker Nikola Company (NASDAQ:NKLA) stock plunged to shut Wednesday down 6.2% after the firm published, in a DEF 14A filing with the SEC, that in 2020 it issued “efficiency-basically basically basically based stock devices” to firm executives value a blended $567 million — a trace exceeding 10% of Nikola’s total market capitalization at most up-to-date.  

So what

Nikola outlined the stock grants as being “meant to compensate our named govt officers over its three-twelve months duration of time and” stated the awards “will become vested as to all shares field to it most efficient if our fragment trace increases to $55 all over the three-twelve months efficiency duration.”

So it be now not 100% sure that the awards, even though granted, will ever in actuality vest, or that the executives will in actuality gain the stock in ask. It all depends on whether Nikola, which at one level after its IPO by job of a SPAC firm in 2020 had approached a valuation of nearly about $66 a fraction, ever gets help to that level all another time.

Big red arrow going down over a stock chart

Picture supply: Getty Photos.

Now what

At most up-to-date, that seems now not going. Unprofitable and nearly about earnings-much less Nikola stock, after all, for the time being adjustments fingers for only $13 a fraction, and is not in actuality value that rather more than it sold for help when the firm become as soon as comely a glimmer in VectoIQ Acquisition Corp’s sight. Serene, the prospect of management getting so richly rewarded for riding Nikola’s replenish more than 500% in trace, most efficient to drive it comely help down all another time, seems to fetch upset traders this day.

And that is the reason they sold off the stock.

This text represents the thought of the creator, who can also simply disagree with the “official” recommendation residence of a Motley Fool top class advisory provider. We’re motley! Questioning an investing thesis — even one among our fetch — helps us all mediate severely about investing and manufacture choices that help us become smarter, happier, and richer.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.”>

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