An electric-vehicle company whose valuation skyrocketed on the back of a major deal with General Motors experienced a major sell-off in the stock market on Monday after its founder announced his resignation.
Nikola Motor Company founder Trevor Milton, who owned more than a quarter of the company’s outstanding shares in early August, said he would relinquish 4.9 million performance-based stock units and the option of a two-year consultancy agreement with General Motors after Hindenburg Research, a group focused on fraud, claimed he misled investors.
“The focus should be on the company and its world-changing mission, not me,” Milton wrote in his resignation letter. “So I made the difficult decision to approach the board and volunteer to step aside.”
Nikola surged to a record valuation in early September following news that General Motors had purchased an 11% stake in the company and agreed to manufacture battery-electric and hydrogen fuel cell vehicles, including the Badger, Nikola’s first major rollout.
Shares of Nikola fell as much as 20% to about $27 in early morning trading, and Hindenburg claimed Milton’s resignation was “a tacit admission of securities fraud.“
“While founder Trevor Milton’s departure may give the appearance of a company that’s moving on, we believe this is only the beginning of Nikola’s unraveling,” Hindenburg said.
Milton has rejected claims made by Hindenburg, and the company said last week it was discussing the allegations with the United States Securities and Exchange Commission.
