Nikola Loses Founder To Fraud Allegations

Founder and Chairman Trevor Milton steps down as the company is now being investigated by the SEC.

38w ago

Trevor Milton of Nikola, an electric truck startup, has stepped down from his position as Founder and Executive Chairman due to fraud allegations. Currently, Nikola is under investigation by the SEC (Securities and Exchange Commission) after a short seller released a report stating that Nikola is an "intricate fraud."

Nikola entered the energy efficient vehicle game almost unnoticed, that was until the stock shot up in June. This jump in price was partially due to the success of alternative fuel options, especially Tesla. Another reason for this 103 percent jump was Nikola announcing that their Badger pickup truck would be available for order at the end of June. Going public put a fat wad of cash in Founder Trevor Milton's pocket, but also opened the door to an abundance of scrutiny.

Back in June, Bloomberg declared that Nikola wasn't working on a One semi-truck prototype, and that there were essential parts missing. At this point, Nikola threatened legal action against Bloomberg. This whole debacle mostly disappeared for a while, through July and August, but has now made a sudden reappearance in a new string of events.

The latest fiasco exploded on September 10th, after a company called Hindenburg Research released a report stating that Nikola is "an intricate fraud built on dozens of lies." Most importantly, Hindenburg Research is a short seller, meaning they make money when Nikola's stock plummets - just like it did when the report was released. Evidence was presented to back this claim, private phone calls, emails and texts were all used to prove that actions including suggesting that vehicles and technology which were not yet functional were actually running and lying about partnerships all occurred.

This report isn't exactly rock solid, however, as it's in Hindenburg Research's best interest for the Nikola stock to crash. Nikola took this obvious hole to their advantage by releasing a statement that reads "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. We have nothing to hide and we will refute these allegations." This short rebuttal was released on September 11th, but was only a hold over for a longer, more detailed response, one that Bloomberg named a counterargument.

All this has caused the Nikola stock to be extremely volatile, and will shoot up or down 10 percent on a normal day. The percentage decline is usually due to an investor announcing the sale of millions of shares.

In addition to the damning report, Nikola is being sued by a shareholder for making false and misleading statements about its operations. The latter and the report have caused Nikola's Founder and Executive Chairman to resign from the startup. This quite surprising move wasn't executed without explanation, Milton said in a statement that "The company is in amazing hands, and the executive team is well equipped to lead the company into the future, I intend to defend myself against false allegations leveled against me by outside detractors." The last part is crucial to this entire story, as it suggests that this isn't over.

GM's Response

As many know, GM has recently partnered with Nikola, a $2,000,000,000 deal that permits GM to build both the fuel cell and electric versions of the Nikola Badger. GM CEO Mary Barra has responded to Hindenburg Research's report by saying "The company has worked with a lot of different partners, and we're a very capable team that has done the appropriate diligence." In the case that Nikola goes out of business, GM only has good press to lose.


Even if this all blows over, it will not be forgotten. Somehow the truth will come out, and whether Nikola can overcome these allegations or just pay a fine we'll just have to find out. One thing is for certain though - Trevor Milton regrets buying $36,000 of solar panels from Nikola.



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