Nikola dives 28% after founder Trevor Milton steps down as executive chairman

Massimo Pinca/Reuters

  • Nikola tanked as much as 28% in early Monday trading after founder Trevor Milton voluntarily stepped down as executive chairman and a member of the board.
  • Stephen Girsky, former vice chairman of General Motors, took the reins as the company’s chairman after Nikola’s board approved of Milton’s proposal, according to a press release.
  • Nikola shares traded with massive volatility in recent weeks after short-selling firm Hindenburg Research accused the automaker of lying about its technology and order book.
  • While Milton’s departure will likely be viewed as “a major near-term gut punch” by Wall Street, the stock is still in a “prove me” phase with plenty of time to meet its goals, Wedbush analyst Dan Ives said Monday.
  • Watch Nikola trade live here.

Nikola shares tanked as much as 28% in early Monday trading after founder Trevor Milton voluntarily stepped down as executive chairman and a member of the board.

The electric-vehicle company announced the surprise shakeup on Sunday. Nikola’s board accepted Milton’s proposal, and Stephen Girsky, former vice chairman of General Motors, now serves as the company’s chairman.

“Nikola is truly in my blood and always will be, and the focus should be on the company and its world-changing mission, not me,” Milton said in a statement. 

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The company’s stock has traded with outsized volatility in recent weeks after short-selling firm Hindenburg Research accused Nikola of lying about its technology and order book. Nikola fired back soon after, claiming Hindenburg’s report was “not accurate” and “a hit job for short sale profit driven by greed.”

Milton slammed the short-sellers again in a Monday tweet, saying he plans to defend himself “against false allegations leveled against me by outsized detractors.”

Still, Nikola’s rebuttal hasn’t cleared up the short-seller dilemma. Bloomberg reported last week that the Securities and Exchange Commission is probing Nikola over Hindenburg’s claims and whether the automaker may have violated securities laws.

The company’s leadership shift arrives at a pivotal moment for the growing firm. GM took an 11% stake in Nikola earlier this month as the industry giant rushes to compete with other zero-emissions vehicle manufacturers. Though Hindenburg’s report sparked some concerns about the deal, GM CEO Mary Barra told investors last week that the company conducted “appropriate diligence” on the $2 billion deal.

The GM partnership is a “linchpin” to Nikola’s success, Wedbush analyst Dan Ives said in a Monday note. While Wall Street will likely view Milton’s departure as “a major near-term gut punch” to Nikola’s valuation, the firm is still a “prove me” stock with time to execute on its key goals, he added.

Nikola closed at $34.19 per share on Friday.

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