CEO Trevor Milton called the allegations “false and deceptive” and said Nikola has authorized law firm Kirkland & Ellis LLP to contact the U.S. Securities and Exchange Commission.
“An activist short-seller whose motivation is to manipulate the market and profit from a manufactured decline in our stock price published a so-called ‘report’ replete with misleading information and salacious accusations directed at our founder and executive chairman,” the company said in a statement. “To be clear, this was not a research report and it is not accurate. This was a hit job for short-sale profit driven by greed.”
Shares of the Phoenix-based company plunged 11% Thursday after short-seller Hindenburg Research put out a report that characterized Nikola as “an intricate fraud built on dozens of lies.”
Hindenburg said it had phone calls, text messages, emails and photographs to back up its claims that Milton misled partners about Nikola's technology.
Short-sellers often dump borrowed shares of a company before publishing negative claims in hopes of driving down the price, which would let them buy enough shares at a lower cost to cover their sales and pocket the difference.
Investors were short 12.55 million shares, or 9.23% of the total available, for trading through Thursday, according to financial-analytics firm S3 Partners. Total short interest in the stock was $532 million, making the company the 11th most-shorted in the auto manufacturing and construction machinery\heavy truck sectors.
Hindenburg’s accusations came just days after Nikola said it would use General Motors’ battery technology as part of an agreement the two companies reached to collaborate on building the battery-electric and fuel cell-electric models of Nikola’s Badger pickup truck. GM, for its part, will receive $2 billion of newly issued Nikola stock, good for an 11% stake.
Detroit-based General Motors on Thursday stood by its partner, with a spokesperson saying the automaker is “fully confident” in the value that will be created by working with Nikola.
Nikola shares were up 12% from their June 3 Nasdaq debut through Thursday, outperforming the S&P 500’s 8.39% gain over that time.