Nikola Corp. shares dropped as much as 18% after the company issued a blanket denial of allegations made in a short-seller report without offering any specifics to refute allegations it lied about its technology and staged events.
The electric-truck startup said allegations made by Hindenburg Research are false but did not provide evidence to refute specific claims in the report. Chairman and founder Trevor Milton had vowed earlier Friday to issue a detailed rebuttal after “working through the night.” Nikola instead said it hired law firm Kirkland & Ellis to consider its legal options and plans to bring unspecified documentation to the attention of the Securities and Exchange Commission.
“We have nothing to hide and will refute these allegations,” the company said Friday in a statement. “To be clear, this was not a research report and it is not accurate. This was a hit job for short sale profit driven by greed.”
Milton said in tweet Friday he wouldn’t make any further comments “on the advice of counsel” other than to say that “Nikola approached the SEC, not the other way around.” He earlier said he would provide a “detail report” to address the allegations.
Judy Burns, an SEC spokeswoman, didn’t immediately respond to a request for comment.
Hidenburg Research’s founder, Nathan Anderson, said his firm welcomed Nikola’s pledge to petition securities regulators. “We are pleased that Nikola is engaging with the SEC and we are not surprised that Trevor Milton is not commenting further on advice of counsel,” he said in a phone call.
Nikola’s reply came in an effort to reassure investors after the report — issued Thursday by a firm that may stand to gain from a decline in the share price — alleged the startup made non-working products appear as fully functional, staged misleading videos and told “dozens of lies” about its capabilities, partnerships or products.
Nikola fell 17.8% to $30.87 as of 10:39 a.m. in New York. The shares extended their losses after another short-seller weighed in. Citron Reseach thanked Hinddenburg in a tweet, offering to pay for half of any legal expenses incurred.
The deal committed GM to manufacturing the startup’s debut electric pickup, called the Badger. The Detroit giant also will provide fuel-cell and battery technology for Nikola’s semi trucks, which are due to be built at a factory under construction in Coolidge, Arizona.
In June, Bloomberg News reported that, according to people familiar with the matter, Milton had exaggerated the capabilities of its debut big rig during an unveiling event in December 2016. Hindenburg refers to that story in a portion of its report.
More must-read tech coverage from Fortune:
- This is the best wireless carrier by far, survey finds
- PayPal’s CEO on why moral leadership makes clear capitalism needs an upgrade
- China’s top chipmaker could be Trump’s next target in the trade war
- Fortune’s 2020 40 Under 40
- Commentary: The race for a COVID-19 vaccine shows the power of “community intelligence”