Nikola shares continued to drop despite denying claims its founder misrepresented the company's ... [+]
Nikola fired back at a scathing report by an analyst with a short position in the company’s stock that accused it of being an “intricate fraud,” denying its findings and retaining a high-profile law firm for a possible legal response. Yet Nikola shares fell further on Friday.
“An activist short-seller whose motivation is to manipulate the market and profit from a manufactured decline in our stock price published a so-called ‘report’ replete with misleading information and salacious accusations directed at our founder and executive chairman,” Nikola said Friday. “To be clear, this was not a research report and it is not accurate. This was a hit job for short sale profit driven by greed.”
The hydrogen truckmaker said it has nothing to hide in and we will refute the allegations. Nikola also hired Kirkland & Ellis LLP, a law firm that often works with automakers, “to evaluate potential legal recourse, including with respect to the activist short seller and any others acting in concert.”
The report, “Nikola: How to Parlay An Ocean of Lies Into a Partnership With the Largest Auto OEM in America” by Nate Anderson, a CFA whose Hindenburg Research says it specializes in forensic financial analysis, helped drive an 11% drop in Nikola shares on Sept. 10. Among its accusations, the “breakthrough” battery system Nikola founder and Executive Chairman Milton said the company was working on last year doesn’t exist and the company has claimed to have designed technology and vehicle components purchased from other manufactures as its own. “We have never seen this level of deception at a public company, especially of this size,” Anderson said.
Nikola dropped 14% to $32.13 at the close of Nasdaq
The Hindenburg report came two days after Nikola’s surprise news of a far-ranging manufacturing and technological tie-up with General Motors
The move boosts the odds Nikola, which won’t generate meaningful revenue for at least two years, can get its heavy-duty electric trucks into production (more or less) on schedule and take Elon Musk’s Tesla Semi in the race to commercialize zero-emission trucking. It also complements Nikola’s previous alliances with companies including Bosch, Meritor, European truckmaker Iveco, Nel Hydrogen and solar panel giant Hanwha.
Nikola’s decision to use GM’s battery system was a surprise because Milton had said last year the company was developing its own new chemistry that would be a breakthrough. On a call Sept. 8 conference call, he said it’s a near-term cost decision to use GM’s Ultium system, though “our next steps will be where I get together with with GM, and the other battery suppliers, and and talk about if (Nikola’s) technology could be utilized or implemented to help them drive down their costs as well.”
Milton’s battery claims last year were based on work being done by ZapGo, a U.K.-based startup that Nikola invested $8 million and intended to acquire. Its technology did not work as promised, however, and Nikola sued ZapGo in March 2020. The battery company filed for bankruptcy in July.
Nikola’s core business is to be semi-trucks powered by hydrogen fuel cells and batteries and a network of fueling stations to power them. The hydrogen is to be made by Nikola, relying mainly on electrolysis to extract the element from water using renewable electricity. The company has 14,000 orders for the emission-free trucks, led by beermaker Anheuser-Busch, with plans to begin delivering hydrogen models in 2023. Prior to that, it will sell battery-powered trucks produced with partner Iveco in Europe, and is building a plant in Arizona to produce its Nikola One, Two and Tree models.
Milton directly responded to a specific charge in the Hidenburg report, that test versions of its battery-powered Tre trucks were not being built at partner Iveco’s plant in Ulm, Germany, with tweeted pictures of the vehicles.
“These were planned to release later but alleged trucks didn't exist in Ulm Germany. Do these look fake?” Milton said. “Thanks to the Ulm fab / assembly teams for showing the trolls what's up. You guys have my admiration.”
