Nikola Corporation (NASDAQ:NKLA) shares are gaining in the premarket session on Friday after ending yesterday's session with a massive 31.5% dip.
Yesterday, the company announced that its board of directors had approved a 1-for-30 reverse stock split. The reverse stock split will be effective as of June 24 at 4:01 p.m ET, and the stock will begin trading on a split-adjusted basis beginning on June 25.
A company can use a reverse stock split to increase its stock price by significantly decreasing the total number of shares available, thereby preventing potential delisting from an exchange.
The board already approved the reverse stock split earlier this month during the company's annual meeting.
However, the EV maker's headwinds do not ease here.
Earlier in June, Trevor Milton, Nikola's convicted founder, said he filed a multi-billion derivative lawsuit against the company's present chief legal officer, Britton Worthen, and its directors.
Milton announced the lawsuit via a social media platform. "Just filed a multi billion dollar derivative malpractice lawsuit against Nikola motor company's directors and chief legal officer Britton Worthen. GET READY!" Milton wrote.
In addition, the company's removal from the Russell 3000 Index, as per FTSE Russell's preliminary list, casts a shadow.
Related: Nikola's Rocky Road: Reverse Stock Split Approved, But Removal From Russell 3000 Looms
The Russell 3000 Index, a key benchmark, measures the performance of the 3,000 largest publicly traded U.S. companies by market capitalization.
Inclusion in this index significantly boosts a company's visibility and can attract mutual funds and ETFs.
In its first-quarter results, the company reported sales of $7.5 million, vs. $10.7 million a year ago, missing the analyst consensus estimate of $15.8 million. Adjusted EPS loss of $0.09 versus $0.22 Y/Y, beat the analyst consensus loss estimate of $0.10. Nikola produced 43 trucks in the quarter compared to 63 a year ago and shipped 40 trucks compared to 31 a year ago.
Price Action: NKLA shares are trading higher by 4.07% to $0.3430 premarket at last check Friday.