The once promising US company Nikola is accused of having used a ‘pump and dump’ scheme after allegations of fraud emerged. The reports about the massive possibilities of their electric trucks show little reality. Founder and CEO Trevor Milton has now stepped down as chairman.
The US stock exchange regulator Securities and Exchange Commission (SEC) is investigating allegations of deception and fraud against electric vehicle builder Nikola. Insiders report to Bloomberg news agency that the SEC is looking into whether those allegations are correct. Nikola has denied the charges.
The case revolves around a report by investor Hindenburg Research, who accuses Nikola of fraud by, for example, providing incorrect information about the capabilities of his electric trucks. Nikola says that Hindenburg is a “short seller” who, through the publication of a misleading report, wants to manipulate the stock in order to profit from a price drop, after the strong price increase earlier.
Online trading platform Webull believes many more downgrades from Wall Street are in the works.”There is definitely a herd mentality on Wall Street, and when one firm issues a sell rating, it gives cover to other analysts who might have wanted to make a similar call, but were reluctant to be so bold.”
“If the news gets worse, I wouldn’t be surprised if it goes lower than $15.”
Ford and Fiat surpassed
Until recently, the Nikola company was a true stock market sensation. Since it was listed on the Nasdaq technology exchange, the stock has gone up steeply. In June, the company was worth $30 billion, more than Ford or Fiat Chrysler at the time, while there is still no revenue. Nikola Motor Company develops trucks and pick-ups that run on electricity and hydrogen, but the first has yet to be sold.
Founder Trevor MIlton has indicated this week that he will no longer fulfill any substantive tasks at the company with immediate effect. He made the decision to leave himself, the company emphasizes. “The focus should be on the company and its world-changing mission,” Milton said in a statement. But the step seems to have been taken mainly to protect the company. The stock market collapsed from $ 80 in June to below $ 30 now.