Following fraud allegations on Nikola Motor Company (NASDAQ:NKLA) from short-seller research firm Hindenburg Research the company’s shares have been on a downward trajectory. However, the company received a confidence boost after its executive chairman Trevor Milton bought stock.
GM affirms confidence in Nikola
Milton indicated last week that the company is undervalued. He showed his confidence by acquiring 41,400 Nikola shares for $1.3 million at $30.91 per share. He bought the shares through M&M Residual which is a company he owns taking his ownership to 91.6 million shares. The company refuted the fraud allegations from Hindenburg last week.
Also last week the announcement that General Motors (NYSE:GM) was taking an 11% stake in the alternative fuel trucking company offered validation for the company. GM CEO Mary Barra explained that they have been working with different partners and they have done due diligence and their capabilities will work things. In a virtual conference, Barra told RBC capital that they conducted due diligence before finalizing the $2 billion deal with Nikola. GM is expected to manufacture the Nikola Badger which is a full-size truck that users its own battery and fuel cell technology.
The US SEC has commenced an investigation into the fraud allegations against the electric vehicle maker. Nikola’s legal counsel contacted and briefed the SEC on September 11 regarding the claims in the Hindenburg report stating that the company is ready for the agency’s involvement in the issue.
Nikola One truck was not functional when it was showcased
Among the claims made in the report is that the company had shown a video of its prototype Nikola One truck that was not fully functional moving rapidly downhill in a remote road. At the time Milton had indicated that the truck fully functional and works explaining that it will have a chain in the sears preventing people from coming in for safety.
However following the claims from Hindenburg that the truck was towed uphill and let to roll down as if it was using its own power the company has now admitted that Nikola One was not functional.