Shares in truck start-up Nikola fell more than 8 per cent on Thursday after a short-seller’s report claimed the business was an “intricate fraud” that had exaggerated its technology and faked product launches.
Two days after General Motors announced a $2bn deal with the start-up, a report from hedge fund Hindenburg Research claimed to have “extensive evidence” that Nikola’s proprietary technology was purchased from another company, and raised questions about past businesses run by founder Trevor Milton.
The hedge fund is betting against Nikola’s shares, meaning it profits if the stock falls.
In a tweet sent within an hour of the report being posted, Mr Milton said: “Give me a few hours to put together responses to their lies.”
He added: “It makes sense. Tens of millions of shares shorted the last day or two to slam our stock and hit job by Hindenburg. I guess everything is fair game in war, even a hit job. I know who funded it now.”
The group was listed through a blank-cheque acquisition in June, and its shares have more than quadrupled since, buoyed by expectations the company may follow in the footsteps of Tesla, despite having no planned sales until 2022.
The report on Thursday claims that, among other things, Nikola had bought electrical inverters from a supplier while claiming it had made them in-house, covering the branded label with tape during a demonstration video.
In another instance, the hedge fund said Nikola faked a product video by rolling its truck along a downhill stretch of highway, to disguise the fact that the vehicle had no working engine, and filming it to appear it was being driven.
A person familiar with the video confirmed to the Financial Times that Nikola had filmed its promotional video showing a moving truck by letting it roll down a hill in an isolated area in Utah, then edited the video to make the terrain look flat.
The stock, which rose almost 40 per cent on Tuesday following the GM announcement, fell 15 per cent on Wednesday, as rumours in the market circulated about an upcoming critical report.
The Hindenburg report was released before shares began trading on Thursday.
A spokesman for GM said: “We are fully confident in the value we will create by working together. We stand by the statements we made in announcing the relationship.”