Let’s talk crypto, Metaverse, NFTs, CeDeFi, and Stocks, and focus on multi-chain as the future of blockchain technology. Haha, Take it easy. Let us all WIN!
NKLA stock price dropped yesterday. The fall is largely attributed to the report which claimed that Nikola is “an intricate fraud built on dozens of lies over the course of its founder and executive chairman Trevor Milton’s career.”
Nikola Corporation (NASDAQ: NKLA) shares dropped 9.69% to new lows on Thursday, closing the day trading at $19.10. The American company is going through perhaps one of its most challenging times, as it battles fraud charges with the SEC. With most companies globally rushing to quickly evolve and fit into the new world order, post-COVID, investors are likely to get scammed to fuel some of the companies’ missions.
Nikola shares went live this year when the company finalized the acquisition of VectoIQ Acquisition Corporation, a special purpose acquisition company that was run by former General Motors Company (NYSE: GM) executive Steve Girsky.
Initially, Nikola shares were doing very well in the market, as investors continued to bet on the growth potential of electric transportation.
On September 8, 2020, Nikola partnered with General Motors, whereby GM would control 11% of Nikola (valued at approximately $2 billion at the time of the announcement). The latter would also earn the right to nominate one member to Nikola’s board. As a result, General Motors is to use its manufacturing facilities to begin production of the Badger, as well as supply fuel cells and batteries to Nikola globally.
Investors were hyped by this announcement which resulted in Nikola stock jumping approximately 50%.
Nikola Shares Downfall
However, things did not stay good for long as on September 20, Nikola shares took a change of direction and have been falling since then. According to the metrics provided by MarketWatch, Nikola shares were up 85.07% year to date through Thursday, however, they have tumbled 73.14% in the past three months through the same period, fell 51.41% in the past 30 days through September 24, and nosedived 43.54% in the past five days.
As of the time of publication, the company had a market capitalization of around $8.02 billion, with outstanding shares at 360.9 million.
The fall is largely attributed to the report by short-seller Hindenburg Research that claimed Nikola of being “an intricate fraud built on dozens of lies over the course of its founder and executive chairman Trevor Milton’s career.”
It was followed by the resignation of founder and CEO Trevor Milton. As a result of the unfoldings, Wedbush downgraded Nikola shares to underperform from neutral and slashed its 12-month price target to $15 per share from $45 per share.
“The Nikola story changes with Trevor Milton gone from the company,” Wedbush analyst Dan Ives wrote in an investor note Thursday morning. “Despite the controversy and noise surrounding Milton, he was the visionary, architect and internal/external force driving Nikola for the coming years and we believe he leaves a huge void that is hard to replace.”
Other news from the stock market can be found here.