Nikola sinks another 18% as Citron Research calls it a ‘total fraud’ and investors shun rebuttal of original short-seller report

REUTERS/Massimo Pinca

  • Nikola shares sank as much as 18% on Friday after Citron Research followed Hindenburg Research in accusing the automaker of fraudulent activity.
  • The slide extends losses that began after Hindenburg published a report slamming Nikola for overhyping its products and filling order books “with fluff.” Nikola stock fell 11% in Thursday trading.
  • Citron congratulated Hindenburg in a Friday tweet for “exposing what appears to be a total fraud with NKLA.”
  • Investors seemingly shunned the automaker’s rebuttal. CEO Trevor Milton called the allegations “false and deceptive,” and a company press release deemed Hindenburg’s report a “hit job for short sale profit.”
  • Watch Nikola trade live here.

Nikola tanked as much as 18% on Friday as investors continued to flee following the release of a scathing short-seller report.

The slump extends losses made on Thursday after Hindenburg Research alleged the electric vehicle company and its CEO, Trevor Milton, overhyped its truck’s capabilities. The firm, which has a short position in Nikola, also accused Nikola of filling its multibillion-dollar order book “with fluff.”

Citron Research backed up the claims Friday morning and congratulated Hindenburg in a tweet for “exposing what appears to be a total fraud with NKLA.”

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Milton fired back at the allegations on Friday, accusing Hindenburg in a tweet of wanting “max damage” with “false and deceptive” statements.

Nikola said in a press release that Hindenburg’s motivation was “to manipulate the market and profit from a manufactured decline in our stock price.” Nikola retained outside counsel Kirkland & Ellis for possible legal recourse and authorized them to work with the Securities and Exchange Commission in rebutting the report.

“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,” the company said.

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

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The Friday slump brings shares to their lowest point since early August. Thursday’s sell-off pushed shares 11.3% lower through the session.

Hindenburg’s report and subsequent responses come days after General Motors inked a deal with Nikola. The partnership, which includes GM taking an 11% stake in the smaller firm, boosted Nikola shares earlier in the week.

Hindenburg said in its report it suspects Tesla’s lead in the electric vehicle sector pressured GM to make the investment. The research firm added that several of Nikola’s partners and investors “have been cashing out aggressively” through the year as its shares surge on strong investor demand.

Nikola traded at $31.92 as of 10:45 a.m. ET Friday.

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