Nikola Corp. NKLA -8.22% said that a video of its electric truck in motion gave a misleading impression it was drivable and that its founder, Trevor Milton, had made several inaccurate statements, part of findings from the startup’s internal review of a damaging short seller’s report.
Short seller Hindenburg Research called Nikola an “intricate fraud” in a roughly 15,000-word September report, saying the company and Mr. Milton had misrepresented its technology. When Hindenburg’s report was released—sending the company’s stock sliding—Nikola said it was false and misleading and reiterated that in subsequent statements.
Nikola said Thursday that its review of Hindenburg’s allegations found that nine statements by the company or Mr. Milton were wholly or partially inaccurate. Among the things cited by Nikola was the video of the truck moving.
Nikola didn’t directly address other allegations in the short seller’s report other than to say: “In other respects, the Hindenburg article’s statements about the company were inaccurate.”
The review disputed Hindenburg’s conclusion that the company was a fraud, Nikola said, and outside consultants determined its staffing and technology were appropriate for an early-stage company. The review was commissioned by the company’s board and carried out by outside law firm Kirkland & Ellis LLP.
The review didn’t issue any conclusions as to whether any of the inaccurate statements violated any statute. The Justice Department and the Securities and Exchange Commission issued subpoenas to the company following Hindenburg’s report.
A spokesman for Mr. Milton declined to comment. Hindenburg said it believed the disclosure amounted to an admission of securities fraud. A spokeswoman for Nikola declined to comment on the disclosure.
Following the Hindenburg report, Nikola spent months dogged by the short seller’s claims and subsequent scrutiny. Mr. Milton stepped down as executive chairman. The report derailed talks that had been under way with potential partners such as BP PLC over building hydrogen refueling stations, The Wall Street Journal reported. A deal with General Motors Co. that would have seen the auto maker take an 11% stake in Nikola fell through.
Shares of Nikola have lost 54% of their value since the report was published, trading at $19.72 at Thursday’s close.
Nikola has advanced $8.1 million of Mr. Milton’s attorneys’ fees according to his indemnification agreement, the company disclosed Thursday. In all, the company had legal expenses of $27.5 million last year, primarily related to the short seller’s report, company filings said.
Phoenix-based Nikola, which plans to build and lease battery- and hydrogen-fuel-cell-powered heavy trucks for long-haul trucking, went public through a merger last June and has backing by CNH Industrial NV and auto-supply giant Robert Bosch GmbH.
Nikola briefly surpassed Ford Motor Co. in stock-market value, riding investor enthusiasm for clean transportation that has led to a wave of public listings for companies that have yet to bring a product to market.
Nikola released the findings of its review along with its fourth-quarter results Thursday. The electric-truck startup recorded a net loss attributable to common shareholders of $147.1 million, compared with a loss of $43.1 million in the prior-year quarter. The company didn’t report any revenue in the quarter.
The company also revised expectations for delivery of its Tre BEV truck in 2021 down to a range of approximately 50 to 100 vehicles, which it said would represent between $15 million and $30 million in sales. In addition, Nikola executives said talks with potential partners over hydrogen-station deals had picked up again after being disrupted last year.
—Kimberly Chin contributed to this article.
Write to Ben Foldy at [email protected]
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Appeared in the February 27, 2021, print edition as ‘Nikola Concedes Inaccurate Promotion.’
