Nikola Corporation (NKLA) Accused of Misleading Shareholders
During the class period, Trevor Milton, chairman and founder, repeatedly falsely touted the strength of Nikola’s financial, technological, and operational profile. On September 10, 2020, Hindenburg Research published a scathing report alleging that Milton had misled partners into signing agreements by falsely claiming to have extensive proprietary technology. Among other things, the report claimed that Milton had staged a video of Nikola’s semi-truck cruising down a road by filming the truck rolling down a hill and that, despite claiming Nikola designs all key components in house, the Company appears to simply be buying or licensing them from third-parties. On this news, Nikola’s stock dropped 11.33% to close at $37.57. Shortly thereafter, the Securities Exchange Commission and Department of Justice announced investigations against Nikola. On this news, the stock dropped to close at $32.83 on September 15, 2020. Then, on September 21, 2020, Milton resigned as executive chairman, causing the stock to decline 19%. By September 23, the stock was trading at just around $23.00.
