Nikola (NKLA) - Get Report shares plunged lower Monday after founder and executive chairman Trevor Milton stepped down from the electric truck maker following allegations of fraud levied by noted short seller Hindenburg Research.
Milton, who will be replaced by former General Motors' vice chairman Stephen Girsky, was accused by Hindenburg of orchestrating an "intricate fraud built on dozens of lies", citing data from phone calls, text messages and emails that it says detail dozens of false statements
Hindenburg also says claims Milton hyped his company's battery technology after becoming aware of issues related to a planned acquisition in October of last year, all of which the 39-year old entrepreneur has strenuously denied even as reports emerged of a Securities and Exchange Commission investigation and a Department of Justice probe into the claims.
"Nikola is truly in my blood and always will be, and the focus should be on the Company and its world-changing mission, not me," Milton said in a Sunday statement. "So I made the difficult decision to approach the Board and volunteer to step aside as Executive Chairman. Founding Nikola and growing it into a company that will change transportation for the better and help protect our world's climate has been an incredible honor."
"As we move forward, I am confident Steve is the right leader to guide our vision at the Board level," he added. "In addition to being an early believer and supporter of Nikola, Steve has more than 30 years of experience working with OEM leaders, suppliers, dealers, labor leaders and national policy makers, and has served as a director of numerous public companies."
Nikola shares were marked 28.8% lower in pre-market trading Monday to indicate an opening bell price of $24.47 each and a market value of just over $9 billion. Nikola went public on June 4 following a reverse merger with VectoIQ, a publicly-traded special purpose acquisition company, or SPAC.
Last week, as questions over the Hindenberg note loped billions from Nikola's market value, General Motors (GM) - Get Report CEO Mary Barra, who unveiled a lucrative joint venture with Nikola in early September, told an industry conference Monday that questions regarding the issues raised should be put directly to the company, but added that the carmaker performed a “thorough review of business, legal and technical matters” before inking its deal.
GM shares were marked 3.75% lower in pre-market trading at $30.32 each after saying it would 'work with' Nikola to close the deal it announced in early September.
Nikola, meanwhile, always insisted that it has been been vetted by some of the biggest names in the auto and industrial sector, including Germany's Bosch, and insisted its Tre semi-truck, which is being produced in conjunction with Europe's IVECO, will be available by the fourth quarter of next year, around the same time it will be testing a pre-production Nikola Two, a hydrogen-electric powered semi-truck for the medium and long-haul trucking sectors.
"We remain committed to delivering on our objectives and creating value for our shareholders," CEO Mark Russell said Sunday. "Along with the rest of the management team, I will continue to work closely with Steve and the Board to advance Nikola's vision for the future."
"Our priorities remain unchanged and, in collaboration with our partners, we are laser-focused on executing on our strategic initiatives and laying the groundwork to become a vertically integrated zero-emissions transportation solutions provider," he added.