Yahoo Finance Nikola shares crash as founder steps down following fraud allegations
Shares in Nikola crashed after Trevor Milton resigned as executive chairman following accusations that the electric truck maker he founded was an "intricate fraud".
He will be replaced by board member Stephen Girsky, who is a former vice-chairman of General Motors and helped lead the carmaker out of bankruptcy.
Shares sank more than a quarter as trading began in New York on Monday.
“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,” Mr Milton said. “So I made the difficult decision to approach the board and step aside.”
Milton's resignation comes less than two weeks after a short seller attack by Hindenberg Research that cast doubt on claims by Nikola about its hydrogen powered trucks.
Hindenburg accused Nikola of deceiving investors about its business prospects - claims that are now the subject of investigations by the US Securities and Exchange Commission and, reportedly, the Department of Justice.
Nikola had rejected most of the claims in the Hindenburg report, but it did not deny that it staged a 2017 video of one of its prototypes apparently in action.
According to Hindenburg, "Nikola had the truck towed to the top of a hill on a remote stretch of road and simply filmed it rolling down the hill."
Nikola responded that it had "never stated its truck was driving under its own propulsion in the video" but had simply said that it had been "in motion."
I will be cheering from the sidelines with you. Your greatest fan. pic.twitter.com/IaYfZedYhK
— Trevor Milton (@nikolatrevor) September 21, 2020
Mr Milton said he was prepared to defend himself against "false allegations leveled at me by outside detractors".
The Phoenix-based company was founded in 2014 as a rival to Tesla. Its products include fully electric trucks and hydrogen cell powered semis.
Nikola has faced a turbulent period in the aftermath of a short-lived share rally following GM’s surprise decision earlier this month to take a $2bn (£1.56) stake and manufacture its new pickup truck.
The Detroit-based automaker got a cash-free 11pc equity position in its smaller partner in a bid to scale up and fast-track its own vehicle electrification efforts.
At its closing-price peak of $79.73 on June 9, Nikola’s market capitalisation was $28.8bn and at times surpassed Ford’s valuation. Milton was worth $9bn within days of the listing, according to the Bloomberg Billionaires Index. His fortune shrank to $4bn before Monday’s stock plunge.
