Tesla (NASDAQ: TSLA) has been one of the best-performing stocks this year on the market. However, while the same excitement has spilled over to other electric car manufacturers, the smaller nature of these companies means that they find themselves receiving a fair deal of investor skepticism. It was challenging enough for Elon Musk to turn Tesla into a success, who had access to billions of dollars of personal financing that he could use. This next generation of EV makers don’t have that same luxury. As such, it wasn’t surprising that Nikola (NASDAQ: NKLA), one of Tesla’s newest competitors, became the target of short-sellers recently.
More specifically, Nikola was accused of making a number of fraudulent claims from the famous short-seller Hindenburg Research. This particular company has had a history of publishing research against somewhat shady companies, although not all of their targets were necessarily in the wrong. Nikola defended itself, claiming that Hindenburg’s report contained “dozens” of inaccuracies.
However, the biggest claim that Hindenburg made, which Nikola didn’t dispute, was that the truck Nikola showed in a video showing was just for show and wasn’t fully functional, despite earlier claims from the company that it was. If so, that’s a pretty big admission of guilt, even if that’s the only claim that’s been proven to be faulty. Nikola added that while they could have finished the vehicle if they wanted, they decided not to invest the extra resources necessary.
“I think it’s offensive to our strategic partners that you have a short seller who’s doing a hack job and essentially pointing fingers at our strategic partners that they don’t know what they’re doing,” said Nikola CFO Kim Brady in a statement during an RBC Capital Markets conference. “I would suggest it’s ridiculous to think they haven’t done a deep dive; much more deep dive than what any third party short seller would be able to perform.”
One of the more prominent cases that Hindenburg Research predicted was in regards to Aphria, a Canadian cannabis company. While Aphria is still in business today, despite Hindenburg’s claims that the company was worthless, Aphria’s management team ended up resigning over the entire affair.
Shares of Nikola have been on a bumpy ride this year. Starting out at around $10 per share in January, shares shot up to almost $80 before tumbling back down to around the $40 price point. Today’s statement from Nikola’s CFO helped reassure investors that the company’s future remains bright, despite these allegations, and its stock shot up around 11.4% in light of the news.
Another piece of good news for Nikola came from an unexpected analyst upgrade. Analysts from Wedbush went on to say that they predicted the stock rising by around 50% in the future, describing the current market environment as a ‘massive opportunity. Just as quickly as this development occurred, a new twist came later on Monday when the Securities Exchange Commission said it would be investigating Hindenburg’s report as well to see if there’s any merit to it.
Nikola Company Profile
Nikola Corp is a designer and manufacturer of battery-electric and hydrogen-electric vehicles, electric vehicle drivetrains, vehicle components, energy storage systems, and hydrogen fueling station infrastructure. – Warrior Trading News