NEW YORK (AFP) – Shares of electric car start-up Nikola fell sharply for a third straight session on Friday as it doubled down on its rejection of allegations the company is a fraud.
Nikola was down 16 per cent mid-afternoon after sliding 15 per cent on Wednesday and 11 per cent on Thursday.
The Arizona-based company began the week on a high note, soaring 41 per cent on Tuesday after announcing a manufacturing partnership with General Motors (GM).
But on Thursday, a report from Hindenburg Research said the company was built by founder Trevor Milton on an “ocean of lies” that duped investors eager to match Tesla’s success.
Hindenburg is a short-selling firm, which means it makes money by betting a company’s share price will fall.
Nikola vigorously denied the accusations on Thursday and reiterated those points on Friday, characterising Hindenburg’s statement as a “hit job for short sale profit driven by greed.”
Nikola said it had retained a law firm “to evaluate potential legal recourse” against short sellers and would file a complaint with the US Securities and Exchange Commission.
“There’s been obviously controversy around the story but ultimately they’ve executed to the point that the order flow as well as the landmark GM partnership, validate the vision that they have,” said analyst at Wedbush Dan Ives.
Ives said Nikola’s aspirations to build trucks with fuel cells was further off and will require more research and development.
“There’s still a lot of heavy lifting ahead to execute on their vision,” Ives said, but it was notable that “an American stalwart like GM put more credibility in them than some of the sceptics out there.”