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Hanwha, an early investor in Nikola, an alternative-fuel truck manufacturer, said in March that it will sell its shares. Nikola shares were not sold until June, after the price had soared.
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Nikola
So far this year, the stock has underperformed the market, and one of the company’s largest investors sold substantial blocks of shares through automated transactions. The stock of Nikola (ticker: NKLA) has gained 7.7% year to date, limited by selling pressure last week, compared to the 15.9% gain in the S&P 500.
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In May, the developer of electric and hydrogen fuel-cell trucks announced a smaller-than-expected first-quarter loss, but Wall Street remained concerned that the start-up required more funding. Nikola finished several restatements before the report was due. During a spring slump, Nikola’s stock fell below the level at which it became a publicly traded firm through a special-purpose acquisition company last year.
Hanwha, a founding investor in Nikola, said in March that a Hanwha subsidiary would sell half of its 22,130,385 Nikola shares, or 5.6 percent of the firm. Hanwha gave Morgan Stanley permission to sell up to 11,065,190 Nikola shares through a Rule 10b5-1(c) plan. When specific requirements defined by the seller, such as price and volume, are met, the plan automatically conducts trades. The plan will end on December 10th, or when the maximum number of shares has been sold, whichever comes first.
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Despite the fact that the plan was formed in March, no sales were carried out until June, presumably indicating that Hanwha set the plan to sell at prices that were significantly higher than the spring slump. Nikola’s stock rose in value during the next few months. Hanwha’s plan sold 2.9 million shares for $53.7 million between June 9 and 28, at an average price of $18.49 per share, up 33.1 percent from where Nikola stock closed March. Hanwha had 19.2 million Nikola shares after the trades, for a 4.9 percent interest as of June 29. A request for comment from Hanwha went unanswered. Hanwha is no longer required to disclose share sales now that its ownership in Nikola has fallen below the 5% threshold. It has the option to sell the full Nikola interest at any time without further regulatory approval. Ed Lin can be reached at ed.lin@barrons.com, and he can be followed on Twitter at @BarronsEdLin./n
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