A Nikola short released an extensive — and salacious — report today detailing all manner of allegations against the electric truck startup Nikola. The report accuses the company of staging one of its “in motion” videos and says one of its deals fell apart after allegations about prostitutes, among many other things. Nikola founder Trevor Milton has been busy on Twitter responding.
Milton, of course, is no stranger to tweeting, having asked for a Bloomberg reporter to be fired in June on the medium over a story he disliked. Before we get to his latest tweets, let’s review some of the allegations in the report published today by Hindenburg Research, a firm that trades in what it calls “forensic financial research” and has issued numerous reports on other companies.
Hindenburg also disclosed that it has taken a short position on Nikola’s stock, i.e., a position that the stock price will fall. It has fallen today indeed, likely in part a result of Hindenburg’s report.
From the Hindenburg report:
Today, we reveal why we believe Nikola is an intricate fraud built on dozens of lies over the course of its Founder and Executive Chairman Trevor Milton’s career.
We have gathered extensive evidence—including recorded phone calls, text messages, private emails and behind-the-scenes photographs—detailing dozens of false statements by Nikola Founder Trevor Milton. We have never seen this level of deception at a public company, especially of this size.
Trevor has managed to parlay these false statements made over the course of a decade into a ~$20 billion public company. He has inked partnerships with some of the top auto companies in the world, all desperate to catch up to Tesla and to harness the EV wave.
We examine how Nikola got its early start and show how Trevor misled partners into signing agreements by falsely claiming to have extensive proprietary technology.
We reveal how, in the face of growing skepticism over the functionality of its truck, Nikola staged a video called “Nikola One in Motion” which showed the semi-truck cruising on a road at a high rate of speed. Our investigation of the site and text messages from a former employee reveal that the video was an elaborate ruse—Nikola had the truck towed to the top of a hill on a remote stretch of road and simply filmed it rolling down the hill.
In October 2019, Nikola announced it would revolutionize the battery industry. This was to be done through a pending acquisition, but the deal fell through when Nikola realized (a) the technology was vaporware and (b) the President of the battery company had been indicted months earlier over allegations that he conned NASA by using his expense account to procure numerous prostitutes.
Let’s pause here for a moment to highlight the allegedly staged video of the truck powering down the road:
Moving on, you may recall the Bloomberg report that Milton was so mad about centered on “exaggerated” claims Milton made at a semi-truck reveal, claims that Hindenburg also goes after:
The company’s Nikola One “reveal” was a total farce. We corroborate Bloomberg’s earlier work debunking Trevor’s claims regarding its semi-truck that “this thing fully functions and works…this is a real truck” and provide new evidence.
We present behind-the-scenes photos showing that Nikola had an electricity cable snaked up from underneath the stage into the truck in order to falsely claim the Nikola One’s electrical systems fully functioned.
We learned through emails and interviews with former partners that Trevor had an artist stencil “H2” and “Zero Emission Hydrogen Electric” on the side of the Nikola One despite it having no hydrogen capabilities whatsoever; it was built with natural gas components.
We also present evidence that subsequent “reveals” were fictitious. In 2019, Nikola revealed a “next generation” version of its off-road vehicle. We learned that it was scrapped within weeks of the unveiling due to manufacturing challenges. The redesign work was then quietly outsourced.
Nikola’s much-touted multi-billion dollar order book is filled with fluff. U.S. Xpress reportedly accounts for a third of its reservations, representing ~$3.5 billion in orders. U.S. Xpress had only $1.3 million in cash on hand last quarter.
These are some pretty hefty haymakers to be throwing around, and Hindenburg didn’t stop when it came to Milton himself:
Trevor has ensured he is not going down with the ship. He cashed out $70 million around the IPO and amended his share lock-up from 1-year to 180 days. If he is fired, his equity awards immediately vest and he is entitled to collect $20 million over two years. Milton has laid the groundwork to extract hundreds of millions from Nikola years before ever delivering on his promises.
For the evidence to back up all these claims I invite you to read Hindenburg’s exhaustive report in full here.
For its part, Nikola gave me the following statement:
Nikola has been vetted by some of the world’s most credible companies and investors. We are on a path to success and will not waver based on a report filled with misleading information attempting to manipulate our stock.
Milton, meanwhile, took to Twitter this morning, suggesting it was all a coordinated attack, while also suggesting that it didn’t amount to much.
A half-hour later he wrote:
And then after that:
Also, somewhere in the mix was the following, which has me perplexed. Milton is referring to a deal Nikola struck earlier this week with GM:
Nikola’s stock is down 5 percent for the day. As of this writing, Milton has not released a detailed report refuting Hindenburg’s claims but I will update this post if he does.