Yahoo Finance users voted Nikola Corp. (NASDAQ: NKLA) as the worst company of the year. And it wasn’t close.
The battery-electric and fuel cell electric truck startup received five times more votes — 15% of 1,582 responses in a poll — than the second place company, which Yahoo Finance did not publicly name.
Only one of five poll respondents said they think Nikola can recover.
Nikola became public in June through a reverse merger with special purpose acquisition company (SPAC) VectoIQ. Nikola is building prototype battery-electric Class 8 truck prototypes in Germany with joint-venture partner Iveco, a subsidiary of early Nikola investor CNH Industrial N.V. (NYSE: CNHI).
As a “pre-revenue” company, Nikola is not yet selling anything. It lost $117 million in the third quarter.
Nikola plans to build hydrogen fuel cell-powered trucks in 2023 at a new plant under construction in Coolidge, Arizona. But first, it will import kitted versions of the battery-powered truck for assembly in Arizona next year.
It is also planning the first of a network of 700 hydrogen fuel stations, each costing $17 million. Nikola’s business model is to lease the trucks, maintenance and hydrogen fuel in seven-year leases for a set price..
Those are the plans Nikola is committed to now.
Fast rise, steady fall
The company valued at $3.3 billion pre-merger raced out of the gate. Its stock price soared from the mid-$30s to more than $93 a share within a week of going public. Then it began a slow but steady decline absent a couple of big jumps based on business deals.
But in the months following its public debut, founder and former Executive Chairman Trevor Milton heavily hyped a consumer-focused electric pickup truck called the Badger. Milton envisioned the Badger as a competitor to Tesla’s CyberTruck, a polarizing design that none-the-less has attracted interest from hundreds of thousands of potential buyers.
Though never seen as more than a computer image, Milton got General Motors Co. (NYSE: GM) to agree to build the Badger in a Sept. 8 deal through which GM would take an 11% ownership stake in Nikola. The automaker also would supply its Ultium batteries and Hydrotec fuel cell stacks for Nikola’s Class 8 trucks. Nikola shares soared 48% on the news.
Death of a deal
The deal effectively lasted for all of two days.
On Sept. 10, short seller Hindenburg Research published a scathing 67-page report alleging Nikola, and Milton specifically, had committed fraud and lied about the company’s technology. Among the allegations was a claim that one of its trucks in a video was not driving but in fact rolling down an incline.
After extending talks beyond an announced Sept. 30 closing date, GM ultimately backed away, agreeing only to a non-binding memorandum of understanding whereby Nikola might purchase GM fuel cells. Shares fell 25%.
By the time that happened on Nov. 30, Milton was out of the picture. He resigned Sept. 21 as executive chairman and shares fell 30%. Milton gave up his board seat but remains Nikola’s largest shareholder. The Hindenburg report led to U.S. Justice Department and Securities and Exchange Commission subpoenas of Milton and current Nikola executives.
Milton’s billions threatened
On Dec. 1, a lockup on 161 million shares purchased by early investors expired. Automotive supplier Robert Bosch sold 4 million shares, triggering a Nikola filing with the SEC because Bosch ownership fell below 5%. Shares fell another 14%.
Milton sold about 3.2 million shares, retaining about 88 million shares. Bloomberg reported that a Milton spokesperson said the founder plans to remain Nikola’s largest shareholder.
Milton cracked the Forbes 400 list of billionaires in September with a reported net worth of $5.5 billion. As Nikola’s stock price has cratered, his net worth is now about $1.7 billion. If shares fall below $11.36 each, he would be out of the billionaires’ club.
Nikola would not comment on the Yahoo Finance designation other than point to a timeline of milestones the company has set through 2023.