Shares in hydrogen truck maker Nikola slump after claims company is an 'intricate fraud'
A $14bn Tesla rival developing hydrogen and electric trucks has been accused of misleading investors in an "intricate fraud", just days after General Motors took an 11pc stake in the company.
Shares in Nikola fell 12pc after Hindenburg Research released a 15,000-word report accusing the truck company, which went public earlier this year, of being built on “an ocean of lies” and criticising founder Trevor Milton for overplaying his company’s achievements and technology.
Nikola said the report was “filled with misleading information” and was an attempt at stock manipulation. Hindenburg has a short position in Nikola, betting that its shares will fall.
Among a series of accusations based on interviews with former employees, financial disclosures and analysis of media interviews and social media statements, the research company said Nikola’s claims to be developing state-of-the-art hydrogen-powered trucks were not based on reality, and that rather than developing its technology in-house, it was relying on outside partners to provide key components.
The report says that the company’s claims to be producing hydrogen at rates significantly cheaper than that of competitors are belied by the fact that it does not yet have any functioning production facilities, and that Mr Milton’s brother Travis is employed as head of hydrogen production despite having an employment history focused on work constructing driveways and barns in Hawaii.
Earlier this year a report by Bloomberg claimed that Mr Milton’s statements at a 2016 unveiling of the company’s Nikola One lorry suggesting that the vehicle “fully functions and works” were not accurate and that it was in fact inoperable. In response Mr Milton said that he “never deceived anyone” and threatened to sue Bloomberg.
Hindenburg also claimed that a widely-shared video released in 2018 which appeared to show the lorry being driven was in fact the result of it being towed to the top of a hill and allowed to freewheel down.
Nikola announced a partnership with General Motors earlier week, which gives the US automotive giant an 11pc stake in the company in exchange for manufacturing its Badger pickup truck.
Filings with US regulator the Securities and Exchange Commission show Nikola expects to use GM's battery technology, despite having claimed earlier to be developing batteries in partnership with a company it planned to acquire, and later with an unnamed university.
Since it went public in June via a reverse merger, Nikola has grown to be worth $14.25bn, and has been widely touted as a competitor to electric vehicle market leader Tesla. Shares fell 12pc after the report was released.
Data from S3 Partners shows that 9pc of Nikola shares are being sold short, with short-selling accelerating over the past week.
In a tweet Mr Milton, who has repeatedly attacked critics on social media and been defiant about his company's achievements, said he would address the claims in detail later in the day.
“It makes sense. Tens of millions of shares shorted the last day or two to slam our stock and hit job by hindenburg. I guess everything is fair game in war, even a hit job,” he said.
A spokeswoman for Nikola said: "Nikola has been vetted by some of the world’s most credible companies and investors. We are on a path to success and will not waver based on a report filled with misleading information attempting to manipulate our stock."
