Nikola (NKLA) - Get Report continued its descent Thursday after influential Wedbush Securities analyst Daniel Ives downgraded shares of the the electric truck maker to sell on recent questions over Nikola’s technology and business model, and what he called a “dark cloud” from Tesla’s (TSLA) - Get Report “Battery Day” reveal.
Shares of Nikola were down as much as 20% in early trading Thursday, extending Wednesday’s 26% drop, following Ives's report, which noted the Nikola story has changed with recent allegations of fraud, the stepping down of CEO Trevor Milton and "serious concerns” over the execution and timing of its “ambitious goals.”
Nikola stock was down 10.12% at $19.01 in late morning trading.
Shares of Phoenix-based Nikola plunged on Wednesday after The Wall Street Journal reported that ongoing discussions between Nikola and major energy companies including BP (BP) - Get Report are on hold following a recent damning short-seller’s report that alleged the company misled investors. Milton stepped down as CEO last week.
Execution risks for Nikola are now "significantly heightened," Ives said in his report, noting that while Nikola’s electric vehicle and hydrogen fuel cell ambitions are still attainable in the semi-truck market, the Nikola story changes with Milton gone from the company.
Recent questions surrounding the Nikola story "raised by the bears will be a dark cloud over the stock until answered," he said, adding that "eye popping battery innovations" from Tesla announced this week including a cheaper, lower-cost battery "throws a wrench" in Nikola's return on investment story around hydrogen fuel cell vehicles.
Nikola, which went public in June through a reverse merger, is targeting the commercial trucking market with a plan to build, lease and sell fuel for semi-trucks powered by batteries and hydrogen.
Under its model, Nikola is looking to build the trucks and produce other necessities, including the hydrogen fuel needed to power its vehicles and their refueling stations.
On Sept. 10, New York-based Hindenburg Research released a research report calling Nikola an "intricate fraud" and outlining what it said were instances of the company allegedly misrepresenting its technology and its progress toward developing its trucks.
Nikola has called the report's allegations false, misleading and motivated by the short seller's desire to damage its stock. The company said it has engaged the Securities and Exchange Commission independently regarding the short seller's report.
Nikola had been in talks with BP and other potential partners to begin building out hydrogen-refueling stations, but those discussions have now stalled following the allegations, according to people familiar with the matter.