Home Business Nikola shares crater by more than 20% after GM gives up equity...

Nikola shares crater by more than 20% after GM gives up equity stake in smaller, reworked deal

Shares of Nikola plunged by as much as 25% in trading Monday morning after General Motors announced that it is giving up an equity stake in the electric truck start-up and the two said they are dropping plans to build the Badger, Nikola’s pickup truck for consumers.

In September, the automakers announced a $2 billion deal that gave GM an 11% stake in Nikola to supply battery and fuel cell technologies as well as produce the Badger pickup.

The deal was initially viewed as a no-lose situation for GM but the talks became convoluted after short-seller Hindenburg Research lobbed fraud allegations against Nikola and its founder, Trevor Milton, who resigned as the company’s executive chairman on Sept. 21.

Shares of Nikola initially rallied on the news in premarket trading Monday before plummeting. As of 9:47 a.m., Nikola shares were down about 21% to $22.05. GM stock was down less than 1%.

Wedbush analyst Dan Ives described the new deal as “a good supply partnership” rather than a “game changer deal” for Nikola.

“In a nutshell, the signing of GM as a partner is a positive but ultimately no ownership/equity stake in Nikola and the billions of R&D potentially now off the table is a major negative blow to the Nikola story,” he wrote in an investor note Monday morning.

The companies said they continue to discuss GM potentially supplying Nikola with battery systems for its planned electric semi-trucks.

Nikola said it will refund all previously submitted order deposits for the Badger, which was dependent on an outside partner such as GM building it.

The allegations by the short seller were published two days after the deal with GM was announced. They have led to inquiries into the company by the Department of Justice and Securities and Exchange Commission. Nikola has said it’s “fully cooperating” with the agencies.

Source link


Please enter your comment!
Please enter your name here

Most Popular

Twitter Permanently Suspends My Pillow CEO Mike Lindell for US Presidential Election Misinformation

Twitter has permanently suspended the account of My Pillow chief Mike Lindell for repeated violations of the company's policy on election misinformation, the...

Charu Hariharan’s song ‘Flight of Joy’ blends Indian classical and the western

Malayalam musician-composer Charu Hariharan on collaborating with Greek drummer Panos Vassilopoulos for the experimental soundtrack  In musician and composer Charu Hariharan’s new crossover collaboration...

Twitter Launches Birdwatch Trial Programme to Let Users Fact Check Misinformation

Twitter said on Monday it launched a pilot programme that has users flag tweets that they believe are misleading and write notes to...

Recent Comments