NEW YORK: Shares of Nikola Corp fell 8% on Thursday after forensic financial research company Hindenburg Research shorted the stock and labelled the electric truck maker a “fraud” in a scathing report, evoking a sharp response from the company, which accused the short-seller of manipulating the high-flying stock.
Hindenburg accused Nikola’s founder Trevor Milton of nepotism and said it has gathered enough evidence to show that Milton made false statements to form partnerships with large automakers.
The short-seller said Milton appointed his brother, Travis, to lead the Hydrogen Production/Infrastructure unit, despite not having any substantial experience related to the sector.
“Nikola has been vetted by some of the world’s most credible companies and investors”, the company said in a statement.
“(We) will not waver based on a report filled with misleading information attempting to manipulate our stock.”
Hindenburg alleged Milton misled partners into signing agreements by falsely claiming to have extensive proprietary technology.
In a on its YouTube channel, Hindenberg even alleged that Milton had falsely claimed repeatedly in 2016 that the Nikola One hydrogen fuel cell electric semi-truck was "fully functioning" and not a dud.
Earlier this week, automaker General Motors Co took an 11% stake in Nikola and said the two companies will join forces to build electric pickup trucks and fuel cell commercial trucks to take on Tesla Inc.
“Nikola seems to be bringing nothing to the partnership but concept designs, their brand name and up to US$700 million they will be paying GM for costs related to production,” Hindenburg said on Thursday.
General Motors said it stands by the statements it made while announcing the partnership.
“We are fully confident in the value we will create by working together,” GM said in a statement.
Shares of Nikola, which have more than quadrupled in value this year, fell 7.7% to US$39.09 in late morning trade. GM’s shares dropped nearly 3%.
