The Funded: Autonomous trucking business Embark looks to be near the end of its road

Embark Technology Inc. is the latest Bay Area business that went public via a blank-check merger that appears to be at the end of its road.

The San Francisco company let go 70% of its workers — about 230 people — last week, according to a regulatory filing it made with the Securities and Exchange Commission Friday and an email CEO Alex Rodrigues sent to employees the same day. Remaining staff at the developer of autonomous trucking technology will wind down Embark's operations as it weighs its options, Rodrigues said. The company and its board are considering selling its assets, restructuring the business and shutting it down completely, he said.

"After thoroughly evaluating all alternatives, we have been unable to identify a path forward for the business in its current form," Rodrigues said in his email. "Although there are many external things that we wish had gone differently, ultimately this outcome is my responsibility."

Investors sold Embark's stock (Nasdaq: EMBK) on the news. In midday exchanges, its shares were down $1.25 a piece, or about one-third, to $2.56 each. After going public at a valuation of $5 billion in late 2021, its market capitalization now stands at around $60 million.

Like many autonomous vehicle and related companies, Embark has yet to post any revenue. In the first nine months of last year, it lost $68.2 million, or $2.98 a share. In that same period, its operations and capital investments burned through $74 million worth of cash, leaving it with $191 million at the end of September.

Unlike other such early-stage companies that went public in blank check mergers and have since run short on cash, Embark had not issued a so-called going concern warning alerting investors that it might run out of cash in the next year. Instead, as of November, when it filed its most recent quarterly report, it asserted it had enough cash on hand to last it for the next year.

But truck manufacturers have been pushing back commercial deployment of Embark's technology, Rodrigues said. At the same time, companies like his that have no revenue have had trouble raising additional funds in the public markets, he said. Embark's decision to shut down comes after company officials have tried to solve those problems, including by exploring a change of its business plan and finding someone to acquire it, he said. Those efforts failed, he said.

"In challenging times, it is the whole company's job to be flexible and optimistic in pursuing a sometimes-changing direction — and it is the job of the CEO to navigate the challenges and make sure those directions ultimately get the team to the other side," Rodrigues said. "You held up your end of that bargain, I was not able to hold up mine — for that I am profoundly sorry."

Embark expects to take a $7 million to $11 million charge related to its layoffs, which it plans to complete by the end of the second quarter, it said in its regulatory filing. It plans to pay affected workers' salaries through June 2 and cover their benefits through the end of August, Rodrigues said.

If it goes out of business, Embark would join Quanergy Inc. and Enjoy Technologies Inc. among the defunct Bay Area businesses that had previously gone public in mergers with special purpose acquisition companies, or SPACs. Both Quanergy and Enjoy sold their assets in bankruptcy proceedings after winding down operations.

There will likely be more such stories in coming months. Nearly 100 companies that went public in SPAC mergers don't have enough cash to make it through the next year, Bloomberg reported last week.

Here's more Bay Area venture and startup news at the start of a new week:

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