Monday, November 30

Electric truck maker Nikola’s shares fall as SEC reportedly examines short seller’s fraud claims

Trevor Milton CEO of Nikola

Massimo Pinca | Reuters

Shares of electric truck maker Nikola fell Tuesday after Bloomberg news reported that the U.S. Securities and Exchange Commission is looking into short seller claims that the company misled investors.

Short seller Hindenburg accused Nikola founder Trevor Milton of making false statements about its technology in order to grow the company and partner with auto companies.

The report, titled “Nikola: How to Parlay An Ocean of Lies Into a Partnership With the Largest Auto OEM in America,” was released two days after the company announced a deal with General Motors that sent both companies’ shares soaring. It characterized Nikola as an “intricate fraud built on dozens of lies” by Milton.

The SEC is reportedly looking at whether Nikola may have violated securities laws, according to Bloomberg.

The SEC routinely probes short seller claims. There’s no guarantee that the commission will launch a full investigation, but the report was enough to send Nikola shares tumbling in after-hours trading on Monday and again in morning trading Tuesday. Shares of the company dropped by about 6% after the markets opened.

The SEC declined to comment Tuesday morning. Nikola, in a statement Monday, said it “proactively contacted and briefed” the agency last week regarding the report. Nikola said it “welcomes the SEC’s involvement in this matter.”

The report was released two days after General Motors said it is taking an 11% stake in Nikola. GM said it planned to produce Nikola’s electric pickup truck, the Badger, by the end of 2022. GM CEO Mary Barra on Monday said the automaker conducted “appropriate diligence” on the company.

Hindenburg doubled down on its claims Tuesday after Nikola’s response Monday. The short seller said Nikola failed to address a majority of questions raised by the report, which characterized Nikola’s response as having “holes big enough to roll a truck through.”

Nikola has repeatedly denied and disputed the claims, however the company on Monday confirmed one of Hindenburg’s largest claims — that it staged a video showing a truck that appeared to be functional but wasn’t.

Nikola did not immediately have a response to Hindenburg’s most recent comments. 

Credit: CNBC

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