Kodiak AI raises $100M in big discount, sends its stock down 37%

Kodiak AI stock fell 37% in after-hours trading Thursday after the self-driving truck startup revealed it raised $100 million by selling shares at a deep discount — a sign investors were willing to back the company but not at its current market price.

The company sold shares for $6.50 each, below their closing price of $9.10, according to a Securities and Exchange Commission (SEC) filing. The increase also included warrants — instruments that give investors the right to buy more shares later at a set price, this time as low as $6.

The funding comes from Ares Management’s existing backers and several unnamed institutional investors.

The influx of capital comes as Kodiak pushes ahead with the expensive task of growing its self-driving truck business, which includes off-road industrial sites and public highways, with the ultimate goal of spending less than it earns. Kodiak reported revenue of $1.8 million in the first quarter, up from $1.4 million in the same period last year. The company’s operating loss was $37.8 million, double what it reported for the same period last year.

Those numbers help explain why discount terms are troubling investors. The company is burning cash quickly, and the promotion — while big — does little to change that figure in the near term.

Kodiak has made recent business progress, including a new commercial contract with Roehl Transport, a Kodiak private truck pilot program for West Fraser Timber Co.’s lumber operation. in Alberta, Canada, and partnering with military vehicle maker General Dynamics Land Systems to develop autonomous vehicles for defense applications.

Under the deal with Roehl, which was also announced Thursday, Kodiak-equipped trucks will transport cargo between Dallas and Houston four times a week. The trucks operate autonomously throughout the journey, but the Kodiak keeps a human safety operator behind the wheel as a precaution.

Kodiak founder and CEO Don Burnette said the company is on track to move to driverless trucks on public highways later this year as it ramps up operations.

“We have a lot of plans to move the best people, and bringing in new partners continues to show momentum,” he said in an interview. “We’re excited about the progress we’re making as we march towards our self-driving launch later this year.”

Currently, Kodiak owns trucks, provides a safety driver, and hauls material for Roehl and its other existing on-highway customers, which include Werner, JB Hunt, Bridgestone, Martin Brower, and CR England. But that arrangement will change when it comes to driverless truck operations.

“Our goal is not to own trucks at that time [but to] use our driver-as-a-service model, there [customers] own and operate trucks,” Burnette said. He added that this is a program he is using with Atlas for its off-highway customers to use without driving in the Permian Basin of Texas.

While the Kodiak plans to roll out a safety driver by the end of 2026, Burnette said it won’t begin operating without driving on public highways until it finishes validating the technology.

“We are already working under all the conditions that we expect to introduce without driving, but there is a lot of verification work that we need to do, and this is where we bring our approach to readiness for autonomy,” said Burnette, describing the program – released on Thursday – as a point from zero to 100 that follows how much internal security verification of the Kodiak has been completed. As of April, Kodiak was at 86%, Burnette said.

The company, formerly Kodiak Robotics, went public in September through a merger with special-purpose acquisition firm Ares Acquisition Corporation II, a subsidiary of Ares Management. The deal valued the startup at about $2.5 billion.

During that time, Kodiak raised $275 million in funding. More than $212.5 million came from institutional investors, including $145 million in PIPE funding (Private Investment in Public Equity, the way investors buy shares directly in a public company) and about $62.9 million in Ares. That trust amount is down from its original $562 million as SPAC investors redeem their shares — a standard condition that allows SPAC investors to get their money before a merger closes.