Cars and Drivers

Short Seller Slams Electric Truck Maker Nikola

Paul Ausick

Published: September 10, 2020 1:12 pm

Since coming public in a reverse merger in early June, shares of Nikola Corp. (NASDAQ: NKLA) nearly tripled in less than a week of trading before dropping below the IPO price by the end of July. The drop followed a secondary offering of nearly 24 million shares and warrants.

Shares traded Thursday at around $39, just $1.45 above the opening price back in June. A blistering report from short seller Hindenburg Research released Thursday morning sent the stock plummeting by more than 12% shortly after the bell.

Hindenburg’s case against Nikola focuses on two things: the electric truck maker’s claims of revolutionary battery technology and Nikola CEO Trevor Milton who, Hindenburg claims, has told “dozens of outright lies” to form partnerships with vehicle makers like General Motors Co. (NYSE: GM) that are desperate “to catch up” with leading EV maker Tesla Inc. (NASDAQ: TSLA).

Almost a year ago, Hindenburg published a report that scalded Bloom Energy Inc. (NYSE: BE), saying “that Bloom’s technology is not sustainable, clean, green, or remotely profitable.” Hindenburg also claimed that cuts in government subsidies would cost Bloom about $247 million in revenues over the next three years.

Bloom’s stock dropped to a low of $2.44 in October but as of Wednesday’s close had recovered to $14.48.

Hindenburg’s attack on Nikola concludes with 53 questions the firm wants the EV maker to answer, most related to contradictions between what Trevor Milton said and what Hindenburg claims actually happened. The short seller pulls no punches:

We think Trevor Milton is incapable of telling the truth. We believe he lies like most people breathe. It is natural for him, and our extensive review of his history suggests it has been this way throughout his entire business career.

Nikola’s stock traded down almost 9% at $38.61 in the early afternoon Thursday. The stock’s 52-week range is $10.27 to $93.99 and the consensus price target is $55.75.

As of August 14, short interest in Nikola totaled 12.15 million shares, about 8.9% of the company’s float. Average daily trading volume in Nikola shares totaled more than 26 million shares for the two-week short interest reporting period.