Shares of Nikola (NKLA) plummeted as much as 29% on Thursday to a low of $0.76 per share amid speculation that the electric vehicle maker may be headed for bankruptcy. The rumors were fueled by a report from Electrek‘s Fred Lambert, who cited a source indicating that Nikola’s CEO, Stephen Girsky, is out and that a bankruptcy filing is already in the works.
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Nikola’s troubles come after another electric vehicle company, Canoo (GOEV), filed for bankruptcy earlier in the week. Nikola, which was founded in 2014 by Trevor Milton, had ambitious plans to revolutionize the commercial vehicle industry with zero-emission trucks. However, the company has faced numerous challenges and controversies over the years, such as a high-profile scandal surrounding its Nikola One concept vehicle.
Indeed, Hindenburg Research’s 2020 report on Nikola accused the electric truck maker of deceiving investors about its technology and staging a corporate video. The report alleged that Nikola’s founder, Trevor Milton, made “dozens of false statements” and that a video showing the company’s semi-truck in motion was actually an “elaborate ruse” filmed by towing the truck to the top of a hill and rolling it down. The report’s findings ultimately led to Milton’s conviction for fraud in 2022.
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. Furthermore, the average NKLA price target of $5.50 per share implies a nearly 500% upside from current levels. However, this does not factor in the possibility of a bankruptcy, which is likely to negatively impact the analysts’ ratings.
