October 8, 2020 Update: Early investors in Nikola (NKLA) haven’t been able to trade their shares due to a lockup period that ends on Nov. 30.
November 30,2020 Update: Shares of Nikola stock (NKLA) plunged more than 20% during regular trading hours today after the deal with General Motors was finalized. The two companies reworked the deal they previously agreed to, making it smaller. According to CNBC, the new agreement eliminates GM’s equity stake in Nikola and its plans to build the Badger pickup truck. GM and Nikola agreed to a $2 billion deal in September that gave GM an 11% stake in Nikola to provide fuel cell and battery technology and produce Nikola’s Badger truck. After Hindenburg Research released a report alleging fraud at Nikola, GM reconsidered the deal. In a note this morning, Wedbush analyst Daniel Ives described the agreement as “a good supply partnership” instead of a “game changer deal” for Nikola. He said GM’s agreement to become a partner is a positive for Nikola, but the lack of an equity stake in Nikola and the billions of dollars of R&D that could be off the table now “is a major negative blow to the Nikola story. The two companies are still talking about GM possibly supplying battery systems for Nikola’s upcoming electric semis. Nikola now must refund all the previously submitted order deposits for the Badger because the deliveries were dependent on GM agreeing to manufacture the vehicle. November 16,2020 Update: Nikola stock jumped by as much as 6% during regular trading hours today after it was reported that the largest public pension fund in the U.S., the California Public Employees’ Retirement System (CalPERS), increased its stake in the company. Unfortunately, the deal with General Motors is still up in the air, and JPMorgan analyst Paul Coster thinks it is still in negotiation. He also thinks Nikola could be prepping for the possibility that GM backs out of the deal. General Motors had expressed interest in supporting manufacturing for the hydrogen-powered Badger truck, but Coster believes Nikola is more focused on its Class 8 trucks. The company’s chief financial officer said they could seek a capital raise in 2021 due to a commitment of up to $700 million in capital expenditures related to the truck. However, Coster added that a deal that excludes the Badger would enable the company to follow through on its truck-only plan and end 2022 with about $300 million in cash on hand. It is possible that GM is waiting to decide whether to enter the deal with Nikola until the Securities and Exchange Commission completes its review of the allegations raised by Hindenburg Research, which claimed Nikola was a fraud, leading to founder Trevor Milton’s departure. October 8,2020 Update: Early investors in Nikola (NKLA) haven’t been able to trade their shares due to a lockup period that ends on Nov.30. However, they’ve watched the value of their investment tank due to the controversy surrounding the company. Now Nikola is set to make a presentation before the Mission Hydrogen conference in an attempt to woo investors leading up to the end of that lockup. The Financial Times reports that Nikola Executive Vice President Jesse Schneider will present details of their hydrogen fuel cell technology before the conference. He will also talk about their plans to build hydrogen fueling stations and infrastructure. Part of the company’s plan to make money is to sell subscriptions to drivers of their fuel cell trucks. The news outlet adds that in addition to wooing investors, Nikola also must convince BP and General Motors not to walk away from their negotiations. GM signed a deal to manufacture Nikola’s Badger pickup truck in return for an 11% stake, which was valued at $2 billion at the time. That deal was scheduled to close at the end of October, but negotiations continue. GM could end up with a larger stake to make up for the decline in Nikola’s stock value. The truck maker is also in talks with BP to build its hydrogen fueling stations. A source told the Financial Times that Nikola was only days from announcing a deal with a major hydrogen partner when the Hindenburg Research report was released, accusing the company of fraud. September 21,2020 Update: Nikola Corporation (NKLA) stock plummeted 20% during regular trading hours today after the company announced on Sunday that founder Trevor Milton was stepping down as executive chairman. He has also resigned from the hydrogen fuel cell truck maker’s board of directors. Current board member and former General Motors vice chairman Stephen Girsky has replaced Milton as executive chairman. Short seller Whitney Tilson said in a recent email to investors that he believed Milton would end up in jail for “fraud.” His comment came after a short report from Hindenburg Research, which later said it considered Nikola’s response to its report as a tacit admission of fraud. Hindenburg alleged a number of wrongdoings at Nikola, including that Milton presented a prototype of the Badger pickup truck and claimed it was closer to market than it actually was. The company later admitted that it had rolled the truck down a hill for a promotional video because the truck wasn’t actually a working prototype.
