Fake News or Fake Truck? Hindenburg Alleges Nikola One Videos Were Faked

Nikola Motor Company (“Nikola”) is an Arizona-based startup company that designs and manufactures electric components, drivetrains and vehicles.

In June of 2020, Nikola was valued at around $12 billion and in September, announced a manufacturing partnership with General Motors (“GM”) where GM would acquire an 11% interest in Nikola. After the announcement, the company’s market cap then increased more than twofold to $30 billion subsequent to its June Nasdaq debut.

The company’s electric semi-truck, Nikola One, also made headlines in September after the forensic financial research firm, Hindenburg Research, made claims that Nikola faked many of its claims related to the Nikola One, going as far as saying that Nikola is “an intricate fraud built on dozens of lies.”  Hindenburg Research alleged that various photos and videos of the Nikola One semi-truck were falsified, stating that the semi-truck could not in fact move on its own and the videos showed it rolling down a hill. Nikola released a statement essentially admitting this, stating that the company “…ultimately decided not to invest additional resources into completing the process to make the Nikola One drive on its own propulsion.” Hindenburg Research’s website also details a history of alleged inconsistent and inaccurate statements by Nikola’s founder, Trevor Milton.

While the allegations made by Hindenburg Research are quite serious, there is an important caveat to this story. One of Hindenburg Research’s primary goals in this scenario is to profit from a decline in Nikola’s stock by shorting the stock. According to Hindenburg Research’s website, “…we use fundamental analysis to aid our investment decision-making, we believe the most impactful research results from uncovering hard-to-find information from atypical sources.” For many, this may call into question Hindenburg Research’s motives and whether or not the firm is providing a public service by alerting the public to potential investor deception.

Nikola’s shares dropped more than 30% following the release of Hindenburg Research’s report. The accusations made in Hindenburg Research’s report resulted in Milton resigning from his role as executive chairman and board member on September 20, 2020. After the news of Milton’s resignation, shares declined another 30%. Currently, Nikola is still in talks with GM, but there is a December 3, 2020 deadline to solidify a deal.

According to the Financial Times, the Department of Justice and the Securities and Exchange Commission are in the early stages of investigating the allegations against Nikola by Hindenburg Research, as well as Nikola’s claims against Hindenburg Research for market manipulation.

If you think your organization might be a victim of fraud, contact Thomas Pratt at 412.697.5615 or [email protected] or Alyssa Brunatti at 412.697.5371 or [email protected]

This article is part of a series supporting International Fraud Awareness Week 2020, additional entries are linked below for reference:

Sources:

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2021 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
IRS Announces 2021 Automobile Depreciation Limitations
The Impact of Environmental, Social and Governance Factors on Business Valuation
Projections: The Dirty Little Secret of Business Valuation
LIFO Liquidation Relief for Automotive Dealers
Valuing a Business: Why Your Deli (Likely) Isn’t Worth $100 Million
M&A Activity on the Rise in 2021
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.

×