Nikola sinks another 18% as Citron Research calls it a ‘total fraud’ and investors shun a rebuttal of the original short-seller report

Nikola Trevor Milton
Trevor Milton, the CEO and founder of Nikola.
  • Nikola shares sank as much as 18% on Friday after Citron Research followed Hindenburg Research in accusing the automaker of fraudulent activity.
  • The slide extended losses that began after Hindenburg published a report on Thursday accusing Nikola of overhyping its products and filling order books "with fluff." Nikola stock fell 11% in Thursday trading.
  • Citron congratulated Hindenburg in a Friday tweet, saying it was "exposing what appears to be a total fraud" with Nikola.
  • Investors seemed to shun the automaker's rebuttal. CEO Trevor Milton called the allegations "false and deceptive," and a company press release deemed Hindenburg's report "a hit job for short sale profit."
  • Watch Nikola trade live here.

Nikola tanked as much as 18% on Friday as investors continued to flee following the release of a scathing short-seller report.

The slump extended losses on Thursday after Hindenburg Research accused the electric-vehicle company and its CEO, Trevor Milton, of overhyping its truck's capabilities. The firm, which has a short position in Nikola, also accused Nikola of filling its multibillion-dollar order book "with fluff."

Citron Research backed up the claims on Friday morning and congratulated Hindenburg in a tweet, saying it was "exposing what appears to be a total fraud" with Nikola.

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Milton fired back at the allegations in a tweet on Friday, accusing Hindenburg of wanting "max damage" with "false and deceptive" statements.

Nikola said in a press release that Hindenburg's motivation was "to manipulate the market and profit from a manufactured decline in our stock price." Nikola said that it retained an outside counsel, Kirkland & Ellis, for possible legal recourse and that it would work with the Securities and Exchange Commission to rebut the report.

"To be clear, this was not a research report and it is not accurate. This was a hit job for short sale profit driven by greed," the company said.

Citron pledged to cover half of any legal expenses for Hindenburg.

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The Friday slump brought Nikola shares to their lowest point since early August. Thursday's sell-off pushed shares 11.3% lower through the session.

Earlier this week, Nikola shares were boosted when General Motors announced a deal in which it would take an 11% stake in Nikola.

Hindenburg said it suspected that Tesla's lead in the electric-vehicle sector pressured GM to make the investment. The research firm added that several of Nikola's partners and investors "have been cashing out aggressively" through the year as its shares have surged on strong investor demand.

Nikola traded at $31.92 as of 10:45 a.m. ET on Friday.

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