Nikola (NASDAQ:NKLA) stock is taking a beating on Thursday as the company’s founder faces fraud charges over statements made to investors.
Trevor Milton, the founder and former chairman of Nikola, is being charged with making misleading statements to investors. The complaints against his claim that he presented Nikola as an already-established electric vehicle (EV) company with major milestones. That’s in contrast to what it is, an early-stage EV maker that hadn’t yet proved itself.
The charges against Milton have to do with statements made between November 2019 to September 2020. Here’s a portion of the indictment, as sourced from Bloomberg.
“For example, on June 25, 2020, Milton sent a series of tweets from his personal account in which he claimed that Nikola would offer a drinking fountain in the Badger. This information came as a complete surprise to Nikola’s designers, engineers, and marketing personnel. When informed of the tweets, one engineer questioned whether ‘this [is] a joke,’ a marketing employee wrote that his ‘head is fuzzy,’ and a designer texted, ‘[u]hhhhh what.'”
With the charges against Milton, Nikola is doing its best to ease the concerns of investors. That includes pointing out that these charges are against Milton as an individual and not the company itself.
Even so, that doesn’t seem to be going over well with holders of NKLA stock. Shares are down 6.5% as of Thursday morning and are down 17.5% since the start of the year. NKLA is also seeing heavy trading with some 13 million shares moving. Its daily average trading volume is below that at around 11 million shares.
There’s plenty of other stock market news for investors to dive into below!
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
