Kodiak AI raises $100M at record low, sending stock down 37%

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

The company sold shares at $6.50 each, below its closing price of $9.10, according to a filing with the Securities and Exchange Commission (SEC). The upgrade also included warrants – tools that give investors the right to buy additional shares later at a set price, currently as low as $6.

The funding came from former Ares Management and several unnamed entities.

The influx of capital comes as Kodiak pushes ahead with an expensive project to upgrade its self-driving car business, which includes industrial sites and highways, with the goal of spending less than it earns. Kodiak report revenue of $1.8 million in the first quarter, up from $1.4 million in the same period last year. The company’s loss from operations was $37.8 million, double what it reported for the same period last year.

Those numbers help explain why the discount wording confused investors. The company is burning cash fast, and the raise — even if it’s big — won’t change the math anytime soon.

Kodiak has made recent progress in business, including a new commercial partnership with Roehl Transport, a Kodiak-powered autonomous vehicle pilot program at West Fraser Timber Co.

Under the agreement with Roehl, which was also announced Thursday, the Kodiak-equipped trucks will carry freight between Dallas and Houston four times a week. The cars drive themselves throughout the journey, but the Kodiak keeps a human safety driver behind the wheel as a precaution.

Kodiak founder and CEO Don Burnette said the company plans to roll out self-driving cars on highways later this year as it ramps up operations.

“We have a lot of long-haul passenger services, and bringing in new partners continues to show interest,” he said in an interview. “We are pleased with the progress we are making as we move towards our driverless launch later this year.”

Currently, Kodiak owns the vehicles, provides the safety driver, and carries Roehl’s products along with his other major highway customers, which include Werner, JB Hunt, Bridgestone, Martin Brower, and CR England. But the system will change once it moves to driverless car services.

“Our goal is not to have cars at that time (but) to use driver-as-a-service, where (customers) have cars,” Burnette said. He said this is the method he uses with his highway client Atlas for driverless deliveries in the Permian Basin in Texas.

While the Kodiak plans to pull a safety driver by the end of 2026, Burnette said it won’t introduce driverless services on highways until it completes proving the technology.

“It is already working in all the conditions that we hope to install without driving, but there is a lot of work to confirm what we need to do, and that is where we bring our readiness,” said Burnette, describing the results – which were released on Thursday – as a zero-to-100 tracking of the degree of verification of the Kodiak’s internal security has been completed. As of April, Kodiak was 86%, Burnette said.

The company, formerly known as Kodiak Robotics, he went public in September through a merger with the special purpose acquisition company Ares Acquisition Corporation II, affiliated with Ares Management. The deal had an initial investment of about $2.5 billion.

During that time, Kodiak raised $275 million in financing. More than $212.5 million came from institutional investors, including $145 million in PIPE (Private Investment in Public Equity, a process where investors buy shares directly from a public company) and about $62.9 million in trust funds from Ares. The trust fund decreased from $562 million when some SPAC investors repurchased their shares – a feature that allows SPAC investors to recoup their investment before closing.