Kodiak AI raises $100M at a steep discount, sending its stock tumbling 37%

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

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

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

The influx of capital comes Kodiak pushes forward on the expensive task of scaling its self-driving trucks business, which covers off-road industrial settings and public highways, with the ultimate goal of eventually spending less than it earns. Kodiak reported revenue of $1.8 million in the first quarter, up from the $1.4 million it logged in same period a year prior. The company’s loss from operations was $37.8 million, twice what it reported in the same period last year.

Those numbers help explain why the discount terms rattled investors. The company is burning cash fast, and the raise — while sizable — does little to change that math in the near 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-hauling operations in Alberta, Canada, and a collaboration with the military vehicle maker General Dynamics Land Systems to create autonomous ground vehicles for defense applications.

Under the deal with Roehl, which was also announced Thursday, Kodiak-equipped trucks will autonomously haul freight between Dallas and Houston on four round trips per week. The trucks operate autonomously on the entirety of the trip, but 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 trucking on public highways later this year as it ramps up operations.

“We have tons of over-the-road long haul initiatives, and bringing on new partners continues to show momentum,” he said in an interview. “We’re excited about the progress that we’re making as we march toward our driverless launch later this year.”

For now, Kodiak owns the trucks, provides the safety driver, and carries the freight for Roehl along with its other existing on-highway customers, which include Werner, J.B. Hunt, Bridgestone, Martin Brower, and C.R. England. But that arrangement will change once it goes to driverless trucking operations.

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

While Kodiak plans to pull the safety driver by the end of 2026, Burnette said it won’t start driverless operations on public highways until it has finished validating the technology.

“It’s already operating under all of the conditions that we expect to launch driverless, but there’s a lot of validation work that we need to do, and that’s where we bring in our autonomy readiness measure,” Burnette said, describing the initiative — released Thursday — as a zero-to-100 score tracking how much of Kodiak’s internal safety validation is complete. As of April, Kodiak was at 86%, Burnette said.

The company, which was previously called Kodiak Robotics, went public in September via a merger with special-purpose acquisition company Ares Acquisition Corporation II, an affiliate of Ares Management. The deal valued the startup at about $2.5 billion. 

At the time, Kodiak raised $275 million in financing. More than $212.5 million came from certain institutional investors, including $145 million in PIPE funding (Private Investment in Public Equity, a method by which investors purchase shares directly from a public company) and about $62.9 million in trust cash from Ares. That trust cash shrank from its initial $562 million as some SPAC investors redeemed their shares — a standard provision that lets SPAC investors recover their money before a merger closes.