Shares of electric truck maker Nikola Corp. (NASDAQ: NKLA) finished the day down nearly 20%, following the resignation of founder and Executive Chairman Trevor Milton on Monday. His resignation stems from concerns over a short seller report questioning the validity of the company’s battery and hydrogen fuel cell claims.
In recent days, the Phoenix-based company has been embroiled in a very public battle with Hindenburg Research and its report, which alleges an “intricate fraud” by Milton and calls into question the claimed functionality of Nikola’s trucks.
The one-day drop follows a post-IPO roller coaster for the company.
After debuting at $37.55 per share on June 4, shares quickly gapped up to more than $90. However, short sellers establishing positions and concerns over the dilutive registration of new shares from original investors hitting the market led to a sell-off.
The stock initially sank to less than $30 per share before rallying back to $50 on news that Nikola would partner with General Motors Co. (NYSE: GM). In the deal, the automaker agreed to take an 11% stake in Nikola in exchange for contract manufacturing services for its battery-electric Badger pickup truck. GM will also be the provider of batteries and fuel cells for Nikola’s Classes 7 and 8 trucks.
Nikola has disputed the report’s claims with Milton calling the piece “a hit job.”
Nikola went public in a reverse merger with SPAC VectoIQ, which was created by former GM Vice Chairman Steve Girsky, who was announced as Milton’s replacement on Monday.
On Monday, GM said it expects to carry forward with the agreement. “We will work with Nikola to close the transaction we announced nearly two weeks ago to seize the growth opportunities in broader markets with our Hydrotec fuel cell and Ultium battery systems, and to engineer and build the Nikola Badger,” the statement noted.
However, there remains concern that the electric pickup, which was not a consideration for Nikola a year ago, could be a casualty of the company’s break with Milton.
Shares of GM finished the day off nearly 5%.
Special purpose acquisition company (SPAC) Tortoise Acquisition Corp. (NYSE: SHLL), which recently inked a deal with electric heavy-duty truck drivetrain provider Hyliion, finished the day up nearly 1%. The S&P 500 ended the day off a little more than 1%.
Shares of NKLA are off 35% since the research report was released.