Nikola shares slide after the top of the contract for EV rubbish vans
Nikola Corporation has rung the Nasdaq Closing Bell remotely from around the world.
Source: The Nasdaq
Nikola shares fell 9% on Wednesday after the company announced it had ended its partnership with Republic Services to jointly develop electric garbage trucks.
Nikola said the decision was made after both companies “determined that combining the various new technologies and design concepts would result in longer than expected development time and unexpected costs.”
“This was the right decision for both companies, given the resources and investment required,” Nikola CEO Mark Russell said in a statement. “We support and respect Republic Services’ commitment to providing environmentally conscious and sustainable solutions for their customers.”
When the deal for thousands of trucks was announced in August, Nikola stock rose 22% to $ 44.81 per share. The shares are currently trading at around a third of that price. The shares were trading at $ 15.33 on Wednesday morning.
“In short, this is a ‘belly blow’ for investors who were hoping that this monster order would be a potential paradigm shift for Nikola and reference clients in the future,” said Dan Ives, an analyst at Wedbush, in a statement to investors on Wednesday .
Republic Services confirmed the termination of the contract, stating that it remains committed to electrification, citing continued relationships with Mack Trucks, Peterbilt Motors and a recent investment in California-based start-up Romeo Systems.
“We look forward to working with all of our OEM partners to benefit from innovative new technologies, advance our fleet electrification goals, and drive responsible growth and value creation. We plan to make additional purchases from various suppliers by 2021.” Republic said in a statement.
The termination of the deal is the latest blow to Nikola, which was considered one of the hottest stocks on Wall Street earlier this year. The company’s fall was as rapid as its rise.
After going public in June through a reverse merger with a special-purpose acquisition company, shares soared as investors bet the company could be the next Tesla. The push was led by then chairman and founder Trevor Milton, who was open, charismatic and very involved in social media – much like Elon Musk, CEO of Tesla.
The hype brought the shares to nearly $ 100 in June and briefly squeezed the company’s market cap above Ford Motor. The stock has always been volatile, but its biggest decline began in September.
Milton stepped down after the Department of Justice and the Securities and Exchange Commission began investigations into fraud allegations by short seller Hindenburg in September.
Hindenburg accused Milton of making false statements about Nikola’s technology to grow the company and partner with auto companies. The report, titled Nikola: How to Partner an Ocean of Lies with America’s Largest Automaker, was released two days after a General Motors deal was announced. It characterized Nikola as “an intricate fraud based on dozens of lies” by Milton.
At the time, Milton and the company denied many of the claims, but admitted one of Hindenburg’s biggest claims – that it staged a video showing a truck that appeared to be in working order but not working, as well as claiming that the truck was full was functional.
GM last month withdrew its original $ 2 billion share deal with Nikola, which would have given the automaker an 11% stake in the company. Consent to a non-binding Memorandum of Understanding for the delivery of fuel cell technology to Nikola.