The company has a $20 billion valuation, 247% stock gains and a newly-inked deal with GM, but is whole thing fake?
That’s the claim of Hindenberg Research, a company that specializes in finding firms that are committing fraud by overstating their revenues, earnings, technology, or whatever else makes them special. The firm recently took aim at Nikola (NKLA), the eventual maker of alternative fuel 18-wheelers. We use the word “eventual” because the company hasn’t produced or sold a single unit, although it did unveil a prototype… sort of.
Nikola claimed to show a video of its combined hydrogen-electric big rig, which uses hydrogen to create the electricity necessary to fuel the motors, cruising down a highway pulling a trailer. But Hindenberg claims the entire thing was a fake, that Nikola found a stretch of little-used highway in the deserts of Utah that has a long, gentle slope. Nikola allegedly towed the truck to the top of the grade, and then shot video of the truck as it coasted down the highway without any power. The whistleblower speaking to Hindenberg claims the truck reached about 50 mph.
Since the allegations, shares of electric-truck maker Nikola have fallen 6% in premarket trading this morning, after a report that the Securities and Exchange Commission is looking into allegations made last week by short- Hindenburg, which called the company an “intricate fraud.”
Nikola has since responded saying the report is “false and misleading” and addressed some of the Hindenburg’s allegations but answered only 10 of 53 questions the short seller posed in its report, Hindenburg responded today, saying
“Of those 10 responses, the company debunked nothing. Instead, it either confirmed or sidestepped virtually everything we wrote about, and in some cases raised new unanswered questions.”
Nikola did admit that its deceptive “Nikola One in Motion” video was, in fact, video of the semi-truck simply rolling down a hill. But it looks like it’s up to the SEC to decide if this is just another hit job, or if Hindenburg might be onto something.