Nikola details ‘false and misleading’ information of short seller’s fraud claims

CEO and founder of U.S. Nikola, Trevor Milton speaks during presentation of its new full-electric and hydrogen fuel-cell battery trucks in partnership with CNH Industrial, at an event in Turin, Italy December 2, 2019.

Massimo Pinca | Reuters

Shares of Nikola remained in the red for the third session in a row during premarket trading Monday as the electric vehicle start-up attempted to refute what it calls a “false and misleading” report last week by short-selling firm Hindenburg Research.

In a lengthy statement Monday, the company said there were “dozens” of inaccurate allegations in the report, and outlined a handful of specific examples.

Nikola shares were trading down about 3% in premarket trading Monday. The stock closed Friday at $32.13, bringing its market capitalization to $11.6 billion after a 14.5% drop.

Hindenburg accused Nikola’s founder, Trevor Milton, of making false statements about the company’s technology in order to grow and partner with auto companies.

Nikola has repeatedly refuted the claims, calling the report “a hit job for short sale profit driven by greed.” The company said it has contacted and briefed the Securities and Exchange Commission regarding its “concerns pertaining to the Hindenburg report.” It also has retained Kirkland & Ellis regarding potential legal options.

The accusations came days after General Motors said it is taking an 11% stake in Nikola. GM said it planned to produce Nikola’s battery-electric pickup truck the Badger by the end of 2022. GM shares gained 1% to end Friday at $30.46. 

Hindenburg said it has evidence including phone call recordings and text messages containing false statements and that the company staged a video showing a truck that appeared to be functional. The research firm said the truck was rather “towed to the top of a hill on a remote stretch of road and simply filmed it rolling down the hill.”

Nikola did not refute the video, saying it “never stated its truck was driving under its own propulsion in the video, although the truck was designed to do just that.” 

“It was never described as ‘under its own propulsion’ or ‘powertrain driven,’ ” the company said. Nikola said investors at the time knew the capabilities of the prototype vehicle, calling the three-year-old video “irrelevant except for the fact that the short seller is trying to use it for its main thesis.”

 – CNBC’s Leslie Josephs contributed to this report.

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