Nikola Falls As GM Shifts Tone On Deal While New Claims Hit Founder

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Nikola (NKLA) and General Motors (GM) are still negotiating a manufacturing partnership with a deadline imminent, while two women accused Nikola founder Trevor Milton of sexual assault. Nikola stock fell.

On Sept. 8, GM agreed to take a big stake to help the electric-car company build its own Badger pickup truck to take on the upcoming Tesla (TSLA) Cybertruck and other electric trucks.

GM would get $2 billion in newly issued Nikola stock, paid for by in-kind services and and various General Motors parts and components, GM also would engineer and manufacture the battery and fuel-cell versions of Nikola’s Badger truck.

At the time, that $2 billion was seen as giving GM an 11% stake, but Nikola’s market cap has fallen below $7 billion.

The GM-Nikola transaction is set to close tomorrow.

Soon after the GM-Nikola deal was announced, a scathing report by short-seller Hindenburg Research accused the electric-truck company of fraud and lies. Milton later announced his resignation as chairman, but GM affirmed it would go forward with the deal.

“We will work with Nikola to close the transaction,” GM said in a statement. “Our overall goal is to put everyone in an EV and accelerate adoption.”

However, GM’s latest statement appeared to mark a shift in tone.

“Our transaction with Nikola has not closed,” a GM spokesperson told CNBC late Monday in an email. “We are continuing our discussions with Nikola and will provide further updates when appropriate or required.”

General Motors was introduced to Nikola through Steve Girsky, a former vice chairman of GM who succeeded Milton as executive chairman at Nikola earlier this month. Girsky is a managing partner at VectoIQ, the special purpose acquisition company that took Nikola public.

Nikola Stock
Shares lost 7.25% to 17.90 on the stock market today. Nikola stock has lost about two-thirds of its value since the GM deal was announced, undercutting the 10- and 40-week lines. Tesla rose 1% and GM sank 2.7%.

Meanwhile, founder Milton’s cousin Aubrey Ferrin Smith filed a formal complaint Saturday with police in Holladay, Utah, accusing him of groping her when she was 15 in 1999, CNBC reported. Her police complaint follows accusations that she made over social media.

A second woman also accused Milton of sexual abuse when she was 15 and working as an assistant in a security company he was running in 2004.

Through a spokesman, Milton “strongly denied” the allegations to CNBC and declined to address the specific details of the women’s complaints.

Nikola lost a key bull on Wall Street last week and may also have lost potential partners, after Hindenburg Research accused Nikola’s 38-year-old billionaire founder of misleading investors.

The short seller report has reportedly led to inquiries by the U.S. Securities and Exchange Commission and Department of Justice. Then last Wednesday, sources told the Wall Street Journal that potential partners are ditching the Tesla rival.

Later that week, Wedbush analyst Dan Ives warned the “light has turned from yellow to red” and that the downside risks outweigh any positives for Nikola stock.

He cited execution risk after the departure of Milton and the Tesla Battery Day announcements that could heighten competitive risk. Ives downgraded Nikola stock to an underperform rating from a neutral, slashing the price target to 15 from 45.

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