Citron Research Joins Nikola Attack

The electric truck maker’s stock continues to drop as another short seller piles on.

Nikola CEO Mark Russell at the Nikola World 2019 event. (Courtesy Isaac Sloan/NikolaMotor)

Nikola CEO Mark Russell at the Nikola World 2019 event.

(Courtesy Isaac Sloan/NikolaMotor)

After short seller Hindenburg Research issued a scathing report on electric truck maker Nikola, the stock fell 10 percent. Now Citron Research, another short seller, has said it will pay half of Hindenburg’s legal costs, even as the beleaguered company denies the allegations in a statement posted on its web site.

Citron Research was founded by private investor Andrew Left and publishes online stock research, including prescient work on scandal-plagued Valeant in 2015.

The stock dropped another 18 percent Friday morning after investors said the company didn’t provide any details aside from bland statements to fight back against Hindenburg’s allegations. Nikola did say in the statement that it has hired a law firm to review legal options and that it would provide the Securities and Exchange Commission with documentation.

Based on recorded phone calls, text messages, and other evidence, Hindenburg says it has detailed false statements by Nikola founder Trevor Milton. Hindenburg claims Nikola misled top automakers into partnering with the firm based on lies about its proprietary technology. Earlier this week, General Motors said it would take a $2 billion stake in the company.

Hindenburg’s claims about the extent of the company’s lies are explosive.


“We reveal how, in the face of growing skepticism over the functionality of its truck, Nikola staged a video called “Nikola One in Motion” which showed the semi-truck cruising on a road at a high rate of speed. Our investigation of the site and text messages from a former employee reveal that the video was an elaborate ruse — Nikola had the truck towed to the top of a hill on a remote stretch of road and simply filmed it rolling down the hill,” according to the short seller.

[II Deep Dive: ‘The Longest Unprofitable Short I’ve Ever Seen.’]

On Thursday, Milton, Nikola’s founder, tweeted that Hindenburg was engaged in a “hit job” and promised a response. He also taunted the short seller with, “This is all you got?”

He has since said he would not comment further, citing advice from his lawyers, although on Friday afternoon he posted a picture he said were of trucks in Ulm, Germany that Hindenburg claimed did not exist. “These were planned to release later but alleged trucks didn’t exist in Ulm Germany. Do these look fake?” The tweet continues, “F@&k the haters. Well [sic] come back stronger from the lies spread about us.”

Nikola went public in June through a Special Purpose Acquisition Company, or SPAC, a mechanism that offers a streamlined way for companies to go public. SPACs, also called blank check companies, raise money that management can then spend on any acquisition.