Nikola Issues Fuller Denial of Short Seller Hindenburg’s Claims

Nikola One electric truck
Hindenburg said the Nikola One lacked key components. Nikola said it was a proof of concept. (Nikola Motor Co.)

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Nikola Corp. made a fuller-throated denial of a report last week that claimed the electric-truck maker had deceived investors, accusing a short seller of mischaracterizations and distortions.

Hindenburg Research, the short seller whose report sent Nikola shares tumbling last week, made false and misleading statements that were designed to manipulate the market, Nikola said early Sept. 14. The U.S. Securities and Exchange Commission is examining Nikola to assess the merits of the allegations, according to people familiar with the matter. Nikola has encouraged the SEC to get involved. 

“Nikola has contacted and briefed the U.S. Securities and Exchange Commission regarding Nikola’s concerns pertaining to the Hindenburg report,” the company said Sept. 14. “Nikola intends to fully cooperate with the SEC regarding its inquiry into these matters.”

Citing people familiar with the matter, the Wall Street Journal on Sept. 15 said the Department of Justice has also launched an investigation.

Nikola pushed back on Hindenburg’s allegations that it had overstated the capabilities of some of its earliest test trucks and said the short-seller took a comment made by an employee of Robert Bosch GmbH, a supplier and investor in the company, out of context. It also said the report underestimated its ability to produce hydrogen for its fuel cell-powered trucks.


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Some of the responses to claims made by Hindenburg, which stands to gain from Nikola shares falling, are more counterarguments than rebuttals. For example, the short seller took the company to task for claiming to have been working on its own inverters, by releasing a video recently that showed it had been using another company’s component with a piece of tape covering the product-description label.

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Nikola confirmed it does use third-party components in prototype vehicles, but they may be swapped out for its own parts in production versions. The company said it has been working on its own inverters.

Hindenburg’s founder, Nathan Anderson, said Sept. 14 that Nikola’s response did not adequately address the issues it had raised. “In the few areas where the company did respond, it largely confirmed our findings or simply raised new unanswered questions. We will be issuing a detailed response,” he said in an email.

All About Execution

Some analysts downplayed the short-seller report, calling Nikola’s strategy of outsourcing key technology a strength instead of a weakness.

“Speed, flexibility and unencumbered readiness to change course quickly with evolving circumstance in a fast-developing market are fundamental and desirable attributes of a disruptor,” Paul Coster, a JPMorgan analyst with an “overweight” rating on the stock, said in a research note Sept. 14. Whatever Nikola has said in the past, “it’s all about execution looking ahead to 2023,” Dan Ives, an analyst at Wedbush Securities with a “neutral” rating on Nikola, said in a note to clients.

Nikola stock trend over time

In one of its critiques, Hindenburg panned the Nikola One, the company’s first semi-truck, calling it “not a real truck” because it lacked key components. Chairman and company founder Trevor Milton’s said in a statement in 2016 the truck was “not a pusher” and “fully functions and works.”

Nikola said it ultimately decided against investing the resources required to allow the truck to “drive on its own propulsion,” although it had been designed to driven under its own power. “The Nikola One was an incredibly successful proof of concept,” it said.

Nonbinding Order

The startup challenged the short-seller’s portrayal of a 2018 promotional video of an early Nikola prototype as misleading. Hindenburg said the truck was “simply filmed rolling down a big hill,” but Nikola said Sept. 14 it never claimed the truck was driving under its own propulsion — though it had described the vehicle as “in motion” in social media posts and other communications.

Nikola did not address an allegation about a non-binding order placed in 2016 by U.S. Xpress Enterprises Inc. for its fuel-cell powered semis. Hindenburg said U.S. Xpress had only $1.3 million cash on hand as of its most recent quarterly report and expectations it could pay for the trucks was “unrealistic.” The short seller cited a Cowen & Co. research note that linked the U.S. Xpress order to Nikola’s statement to investors in April that a single U.S. fleet owner accounted for more than a third of the company’s FCEV semi-truck reservations. Nikola has said its total reservations are worth the equivalent of approximately $10 billion in sales.

U.S. Xpress did not comment on the status of its order but indicated it does not expect near-term delivery. “U.S. Xpress is closely monitoring the development of fuel cell technology but feel a proven solution is still several years away. We’re supportive of research and development efforts by Nikola and other companies in this space,” Brad Carmony, a company spokesman, said in an email.

U.S. Xpress ranks No. 24 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 31 on the Transport Topics Top 50 list of the largest logistics companies.

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