Kodiak AI raises $100M in deep discount, sending stock down 37%

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

The company sold shares at $6.50 each, well below the closing price of $9.10, according to a filing with the Securities and Exchange Commission (SEC). The increase also included warrants – instruments that give investors the right to buy additional shares later at a set price, in this case up to $6.

The funding came from existing backer Ares Management and several unnamed institutional investors.

The capital infusion comes as Kodiak advances the costly task of scaling its autonomous truck business, which covers off-road industrial facilities and public highways, with the ultimate goal of eventually spending less than it earns. Kodiak was mentioned 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 had reported in the same period last year.

These numbers explain why the discount terms rattled investors. The company is burning through cash quickly, and the raise—while quite large—does little to change that math in the short term.

Kodiak has made some recent progress on the business front, including a new commercial contract with Roehl Transport, a pilot program to test Kodiak-equipped autonomous trucks at West Fraser Timber Co.’s log operations. in Alberta, Canada and a partnership with General Dynamics Land Systems to create autonomous ground vehicles for defense applications.

Under the deal with Roehl, also announced Thursday, Kodiak-equipped trucks will carry autonomous cargo between Dallas and Houston on four round trips per 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 driverless trucks onto public highways later this year as it ramps up its operations.

“We have a lot of long-haul initiatives and attracting new partners continues to show momentum,” he said in an interview. “We’re excited about the progress we’re making as we move toward our driverless launch later this year.”

Kodiak currently owns the trucks, provides the safety driver and carries the load for Roehl along with other existing highway customers including Werner, JB Hunt, Bridgestone, Martin Brower and CR England. But that arrangement will change once it moves to driverless trucking businesses.

“Our goal is not to own the trucks at that point [but to] operate the driver-as-a-service model, where [customers] they own and operate the trucks,” Burnette said. He added that this is the system he is using with off-highway customer Atlas for its driverless deployment in Texas’ Permian Basin.

While Kodiak plans to pull the safety driver by the end of 2026, Burnette said it won’t begin driverless operations on public highways until it completes validation of the technology.

“It’s already working in all the conditions we expect it to go into without a driver, but we need to do a lot of validation work, and that’s where we bring our autonomy readiness measure,” Burnette said, describing the initiative — released Thursday — as a zero-to-100 score that tracks how much of Kodiak’s internal safety validation has been completed. As of April, Kodiak was at 86 percent, Burnette said.

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

At the time, Kodiak raised $275 million in funding. More than $212.5 million came from some institutional investors, including $145 million in PIPE (Private Investment in Public Equity, a method by which investors buy stock directly from a public company) funding and about $62.9 million in cash from Ares. That trust’s cash shrunk from the original $562 million as some SPAC investors cashed out their shares — a standard provision that allows SPAC investors to get their money back before the merger closes.