Shares of Nikola (NKLA) jumped after the demise of short seller Hindenburg Research, whose influential 2020 report on the company wiped billions from its value.
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NKLA rallied almost 10% after Hindenburg founder Nate Anderson said he was closing up shop after seven years.
Still, the $103 million market capitalization remains a long way off the $40 billion valuation it once commanded.
NKLA Short Sale Wiped Billions Off Company
One of his most famous shorts, Hindenburg went after electric truck maker NKLA in 2020, saying the company deceived investors about its technology and staged a corporate video.
The firm gathered extensive evidence that it said detailed “dozens of false statements” by NKLA Founder Trevor Milton. “We have never seen this level of deception at a public company, especially of this size,” Hindenburg said at the time.
In particular, it said the company staged a video called “Nikola One in Motion” which showed the semi-truck cruising on a road at a high rate of speed. Its investigation of the site and text messages from a former employee revealed that the video was nothing but an “elaborate ruse,” as the company had in fact had the truck towed to the top of a hill on a remote stretch of road and simply filmed it rolling down the hill.
A U.S. jury convicted Milton of fraud in 2022 over the allegations he lied to investors.
But in a surprise move yesterday, Hindenburg founder Anderson announced that he was shutting down. “I have made the decision to disband Hindenburg Research. The plan has been to wind up after we finished the pipeline of ideas we were working on. And as of the last Ponzi cases we just completed and are sharing with regulators, that day is today,” he wrote on the company’s website.
Anderson noted how nearly 100 people have been charged civilly or criminally by regulators at least in part through Hindenburg’s work, including billionaires and oligarchs. “We shook some empires that we felt needed shaking,” he said.
Arguably its most influential short attack was on Indian conglomerate Adani Group in 2023, which wiped $100 billion in value from the group’s shares.
Is NKLA a Good Stock to Buy
Overall, Wall Street has a Hold consensus rating on NKLA stock, based on one Buy and four Holds. The average NKLA price target of $5.50 implies nearly 350% upside from current levels, although the stock has declined by more than 93% in the last 12 months.
