Home / Business / Nikola sinks another 18% as Citron Research calls it a “ total fraud ” and investors avoid refuting original short seller report

Nikola sinks another 18% as Citron Research calls it a “ total fraud ” and investors avoid refuting original short seller report

Nikola Trevor Milton
U.S. CEO and Founder Nikola Trevor Milton attends a press conference to showcase his new fully electric and hydrogen fuel cell battery trucks in partnership with U.S. Nikola, at an event in Turin, Italy, on December 3, 2019.

  • Nikola’s shares fell as much as 18% on Friday after Citron Research followed Hindenburg Research accusing the automaker of fraudulent activity.
  • The slide extends the leaks that began after Hindenburg released a report berating Nikola for overdoing her products and filling “fluff”
    ; order books. Nikola stock fell 11% in trading on Thursday.
  • Citron congratulated Hindenburg on a Friday tweet to “expose what appears to be total fraud with the NKLA”.
  • Investors apparently avoided the automaker’s rebuttal. CEO Trevor Milton called the allegations “false and deceptive, “and a press release from the company deemed the Hindenburg report a” successful job for short selling profit. “
  • Watch Nikola Trade live here.

Nikola lost up to 18% on Friday as investors continued to flee following the release of a biting short selling report.

The collapse extends to losses incurred Thursday after Hindenburg Research said the electric vehicle company and its CEO, Trevor Milton, overestimated its truck’s capabilities. The firm, which has a short position in Nikola, also accused Nikola of filling its multi-billion dollar order book “with mess.”

Citron Research confirmed the claims on Friday morning and congratulated Hindenburg in a tweet to “expose what appears to be total fraud with the NKLA”.

Read more: Buy these 30 stocks that offer the best bargains for strong sales and earnings growth in an expensive market, says Credit Suisse

Milton responded to the allegations on Friday, accusing Hindenburg in a tweet to want “maximum harm” with “false and deceptive” claims.

Nikola said in a press release that Hindenburg’s motivation was to “manipulate the market and profit from a factory drop in our share price”. Nikola approached outside counsel Kirkland & Ellis for a possible legal appeal and authorized them to work with the Securities and Exchange Commission to disprove the report.

“To be clear, this was not a research report and it is not accurate. This was a successful job for greed-driven short selling profit,” the company said.

Citron has pledged to cover half of Hindenburg’s legal fees associated with a potential lawsuit.

Read more: Buy these 16 tech stocks that were defeated by the pandemic and are now ready for explosive growth in the months ahead, Stifel says

Friday’s plunge brings stocks to their lowest point since early August. Thursday’s sell-off pushed stocks down 11.3% during the session.

Hindenburg’s report and subsequent responses come days after General Motors signed a deal with Nikola. The partnership, which includes GM taking an 11% stake in the small company, raised Nikola’s stock earlier in the week.

Hindenburg said in his report that he suspected Tesla’s leadership in the electric vehicle business prompted GM to make the investment. The research firm added that many of Nikola’s partners and investors “cashed aggressively” during the year as her shares rose on strong investor demand.

Nikola was trading at $ 31.92 at 10:45 AM ET on Friday.

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