GM abandoned a deal with Nikola $2 billion for the purchase of 11% shares of a startup, and plans for joint development and production of pick-up Badger. The company retained a partnership and plans to create a truck Nikola.
Shares of the company Nikola (NKLA), an increase of 97.8% from the beginning of the year, fell 27% on Monday after General Motors (GM) announced that it refuses to purchase the shares of the company, and both said that abandoning plans for the creation of pick-up Badger. Nikola said that he will return to customer prepaid pre-orders for the Badger.
September 8 GM and Nikola announced the signing of a deal under which GM was planning to acquire 11% stake in a startup for $2 billion. the agreement provided that Nikola will use the production capacity of GM technology for production of pick-up Badger. Earlier it was expected that the deal will be closed until September 30.
However, two days after the announcement of the transaction, the firm Hindenburg Research, engaging in “short sales”, published a report that pointed out false statements about the company’s technology, which misled partners and investors.
The publication Hindenburg was discussed that in the presentation video Nikola prototype of the truck “towed to the top of a hill on a remote stretch of road and just filmed as it goes down the hill”.
The video was built so that the truck is moving on its own propulsion on a flat road. This was followed by investigation by the justice Department and the securities and exchange Commission.
Under pressure from the allegations, the founder Nikola Trevor Milton resigned from the post of Executive Chairman of the company on September 21. From September 22 to November 30, Nikola shares fell more than 28%.
What’s next?
According to the press release companies on Monday: “the Company Nikola Corporation announced the signing of an optional Memorandum of understanding (MOU) with General Motors for a global agreement on the supply associated with the integration of “fuel cell Systems Hydrotec” GM commercial semi Nikola with zero emissions of class 7 and 8 for sectors medium and long – haul transportation. It cancels and replaces the deal, announced on 8 September 2020.”
Nikola expects to begin testing the trucks by the end of the 2021-2022 years. In addition, Nikola is negotiating with GM about using the battery Ultium GM in their trucks.
“In short, the signing of GM as a partner is a positive thing, but in the end, the lack of ownership interest / equity in the company GM Nikola and billions of investment in development that have the potential now not to discuss are serious negative impact on the history of Nikola,” wrote Wedbush analyst Daniel Ives on Monday. “It has evolved from a transaction that changed the rules of the game for Nikola to a good partnership in the sphere of supply, but nothing special.”
The end of the “freeze period” stock trading of insiders
The volatility of the stock Nikola today can be reinforced by the fact that since the start of trading on Tuesday will be permitted to trade stock from the leaders and insiders of the company.
They will first sell up to 166 million shares Nikola, the trade of which was banned. The majority of these shares and 91.6 million – belongs to founder Trevor Milton.
