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Nikola rebuts short seller’s screed, share price rebounds (Update 2)

Electric truck startup answers some of Hindenburg Research’s scathing allegations

Nikola refutes short-seller's screed and stock begins to rebound. (Photo: Nikola)

Editor’s Note: Updates with Milton buying shares on short seller-caused dip; adds additional Nikola comment on SEC investigation

Nikola Corp. (NASDAQ: NKLA) rebutted some specifics of a blistering report by a short seller that questioned the startup electric truck maker’s integrity. After continuing a three-day selloff before the stock market opened Monday, Nikola shares began rebounding.

The catalyst for the decline is a 67-page report by Hindenburg Research, which makes money by betting the stock price of companies it targets will fall. Short sellers borrow shares, sell them when the price drops, then buy them back to return to their owners. If the stock in question goes up in price or stays the same, a short seller has to cover its borrowings at a premium.

“Nikola believes that the Hindenburg report… 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,” the company statement said.


In the case of Nikola, Hindenburg achieved its desire, though it never disclosed the size of its short position. Nikola shares rose about 40% last Tuesday, when it announced a manufacturing and supply deal with General Motors Co. (NYSE: GM)

Nikola shares closed Monday at $35.79, up 11.39%, recovering some ground from a retreat that began after the Hindenburg report was published. 

GM will build the Nikola Badger electric pickup on the same platform as its own battery-powered entry. And the automaker will supply its Ultium battery and Hydrotec fuel cell technology for Nikola’s Class 7-8 tractors. Nikola originally sought only a manufacturing partner for the Badger. The battery and fuel cell supply agreement with GM built out a bigger deal.

Initial enthusiasm wanes

Initial enthusiasm over the GM deal, through which GM would gain an 11% stake in Nikola worth $2 billion, waned when critics pointed to Nikola abandoning its touted in-house battery and fuel cell technology. 


The Hindenburg report accused GM of failing to do its homework, but offered no evidence.

“Our company has worked with a lot of different partners,” GM CEO Mary Barra told an online analyst conference Monday. She added that GM had “a capable team that has done the appropriate diligence.”

Hindenburg alleged Nikola was built on lies and misrepresentations.

Trevor Milton, Nikola’s founder and executive chairman, called the report “a hit job.” He promised a thorough and low-emotion response within hours of it being published on Thursday.

However, after a day with only a cursory company statement as a placeholder, Milton said Nikola had hired the Kirkland and Ellis law firm, which has done extensive legal work for GM. Nikola also said it was contacting the U.S. Securities and Exchange Commission (SEC). 

Though he said he had been told to stand down, Milton continued to engage with critics on Twitter through the weekend. On Monday, Milton tweeted, “Our response is out and we are focused on delivering.” 

Milton placed four purchase orders for a total of 41,400 shares with prices ranging from $30.10 to $33.60, according to an SEC S-4 form filed Monday.

Nikola’s lengthy statement hinted at an SEC investigation, possibly triggered by Nikola’s contact. “Nikola intends to fully cooperate with the SEC regarding its inquiry into these matters,” the statement said.


“On Sept. 11, Nikola’s legal counsel proactively contacted and briefed [the SEC] regarding Nikola’s concerns pertaining to the Hindenburg report. Nikola welcomes the SEC’s involvement in this matter.”

Nikola repeats ‘false and misleading’ refrain

Each of the 15 allegations Nikola addressed ended with the refrain: “These allegations by the short seller are false and misleading and designed to manipulate the market to profit from a manufactured decline in Nikola’s stock price.”

Nikola said it has been vetted repeatedly since it began raising money. The diligence began with Robert Bosch in 2017, followed by South Korea’s Hanwha Group and ValueAct Capital in 2018, CNH Industrial N.V. in 2019 and VectolQ Acquisition Corp. and GM in 2020. 

VectoIQ is a special purpose acquisition company (SPAC) led by former GM Vice Chairman Steve Girsky that brought Nikola public through a reverse merger in June.

Coming to Nikola’s defense

“We continue to believe seeing the forest through the trees that Nikola is a story stock now and it’s all about execution looking ahead through 2023,” Wedbush Securities analyst Dan Ives said.

That is the year Nikola expects to be producing hydrogen fuel cell-powered Class 8 trucks from a plant in Coolidge, Arizona. Nikola will lease the trucks for seven years with 1 million miles of hydrogen fuel and maintenance in a package. 

“Nikola indicated their competency is in design and software. And what we really believe is unique and differentiated is the fuel cell lease concept,” RBC Capital Markets analyst Joseph Spak said after hosting Nikola Chief Financial Officer Kim Brady. “In our view, the business model proposition Nikola presents may be a bit misunderstood by the market,” 

Bosch also stuck by Nikola, despite being replaced by GM as Nikola’s fuel cell supplier in North America. Bosch keeps the Nikola business in Europe. It shot down details of a Hindenburg claim that said five pre-production Nikola Tre trucks in Europe did not exist.

“Nikola and Bosch are aligned on the product road map for the Tre truck,” Bosch said. “Hindenburg either recklessly misunderstands or willfully misrepresents the vehicle pre production process to fit its narrative.”

Related articles:

Short seller publishes blistering takedown of Nikola

GM will supply batteries and fuel cells to Nikola

Behind the scenes: How the GM-Nikola tie-up came together

Click for more FreightWaves articles by Alan Adler.

Alan Adler

Alan Adler is an award-winning journalist who worked for The Associated Press and the Detroit Free Press. He also spent two decades in domestic and international media relations and executive communications with General Motors.