The brand of electric vehicles is accused of being “a fraud” by a short seller. The stock plunges, from $ 54 to $ 30.
© Nikola Corporation
Transport and mobility are sectors well represented on Wall Street, but now like other listed companies, setbacks appear once exposed to global finance. Nikola, who climbed the stock market on Tuesday after receiving an 11% stake from General Motors for its electric vehicle manufacturing business, saw the nightmare with his own eyes during the last session.
Its stock fell 12.27% (down 17% today) after Hindenburg Research, an investment firm, accused the startup of being “a fraud”. The short seller wanted to denounce the very presence of Nikola on Wall Street, while the brand has not yet marketed electric vehicles. Critics were directed at Trevor Milton, the entrepreneur and creator of Nikola, who allegedly set up “a complex fraud based on dozens of lies” for Hindenburg Research.
These setbacks follow Nikola's exposure to the stock market after his partnership with General Motors. The investment company judging for example that Nikola had “misled its partners […] by falsely claiming to have important technologies”. On the side of his management, the founder of Nikola is accused of having appointed his brother to a technical post “without the latter having the required expertise” , reports AFP on the criticisms of Hindenburg Research.
A criticism hardly acceptable
Nikola has felt the consequences of these accusations, with its price falling to $ 37.17 shortly before 3 p.m. yesterday on Wall Street, and $ 30 at the opening today. But unfortunately for Hidenburg Research, the hat of short seller isn't the most popular when it comes to business disclosures. As a result of his finger pointing, the investment company placed “shorts”, a short position betting on the fall of a value, in order to make gains. A conflict of interest which somewhat calls into question his point of view on Nikola.
Consequently, Nikola has issued various press releases in his defense, judging on the other hand that they will not waver ” because of a report filled with misleading information aimed at manipulating our action” . General Motors has also spoken, bringing all its confidence in the brand of electric vehicles. In the past, it was its competitor Tesla who had paid the price for such criticism. At the center of criticism, its ability to find balance, then profitability. A witness that is green for the fourth consecutive quarter at present.
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