Trevor Milton, the founder and executive chairman of Nikola Corporation, has resigned from his position amid allegations of fraud by forensic financial research company Hindenburg Research.
Stephen Girsky, former vice chairman of General Motors Co. and a member of Nikola’s board, has been appointed chairman of the board, effective immediately.
On 10 September 2020, Hindenburg Research published a report calling Nikola “an intricate fraud built on dozens of lies”. Hindenburg claimed that it had gathered extensive evidence including recorded phone calls, text messages, private emails and behind-the-scenes photographs detailing dozens of false statements by Trevor Milton. The company’s statement read: “we have never seen this level of deception at a public company, especially of this size.”
The Hindenburg report highlights Milton’s pattern of well-planned and deliberate acts of deception ranging from (a) the staging of non-working products as if fully functional, wrapped in numerous lies about capabilities that don’t exist; (b) the staging of misleading videos, which require extensive premeditation, planning and execution; (c) material lies about capabilities, partnerships and products that simply do not exist at all, on video and often in front of entire rooms full of people; and (d) a culture of secrecy and intimidation that to this point has largely kept it all under wraps.
The report reveals how, in the face of growing skepticism over the functionality of its truck, Nikola staged a video called ‘Nikola One in Motion’ which showed the semi-truck cruising on a road at a high speed. Investigation of the site and text messages from a former employee revealed that Nikola had the truck towed to the top of a hill on a remote stretch of road and simply filmed it rolling down the hill.
The report also points out that Nikola’s ‘revolutionary’ battery technology doesn’t exist. A spokesman for Volvo spin-off Powercell AB, a hydrogen fuel cell technology company that formerly partnered with Nikola, called Nikola’s battery and hydrogen fuel cell claims “hot air”.
The timing of Hindenburg’s report coincided with Nikola’s announcement on 8 September about a strategic partnership with General Motors that invovles General Motors receiving a $2 billion equity stake and 11% ownership of Nikola. As part of the agreement, Nikola will utilize General Motors’ Ultium battery system and Hydrotec fuel cell technology.
Nikola Corp. refuted the allegations calling it a “hit job” for short sale profit and describing the report false and defamatory. The company issued a statement that read: “Nikola believes that the Hindenburg report, and the opportunistic timing of its publication shortly after announcement of Nikola’s partnership with General Motors Co. and the resulting positive share price reaction, was designed to provide a false impression to investors and to negatively manipulate the market in order to financially benefit short sellers, including Hindenburg itself.”
Hindenburg Research disclosed in its report that the company has taken a short position in Nikola Corp (NASDAQ:NKLA) shares and therefore stands to realize significant gains in the event that the price declines.
