Nikola (NASDAQ:NKLA) is in focus following an insider purchase worth $17.4 million from former CEO Trevor Milton. Milton is currently facing four federal fraud charges. During July of last year, Milton was charged with three counts of criminal fraud for lying about “nearly all aspects of the business” in an attempt to attract investors and boost sales. Milton is also accused of taking Nikola public via a special purpose acquisition company (SPAC) merger in order to attract retail investors to the business. Some of these investors lost hundreds of thousands of dollars.
In June, Milton received his fourth charge. Prosecutors allege Milton misrepresented Nikola’s financial health when communicating with the seller of the Wasatch Creek Ranch. Milton offered the seller the option to buy NKLA stock at a discount as partial payment for the ranch in 2020.
Milton’s purchase comes just a few weeks after Nikola replaced Mark Russell with Michael Lohscheller as the company’s new CEO. Let’s get into the details.
NKLA Stock: Trevor Milton Purchases 3 Million Shares
On Aug. 24, Milton purchased 3 million shares of NKLA at an average price of $5.80. The shares were purchased through M&M Residual, where Milton serves as the manager. Furthermore, the shares were purchased “in connection with the sale of real estate by an affiliate of M&M Residual.” After the transaction, he indirectly owns 52.29 million shares, of which 1.25 million shares are attributed to his spouse. In addition, this is the first time that Milton has purchased shares of Nikola since the company became publicly traded.
During the second quarter, the electric vehicle (EV) company manufactured 5o trucks and shipped out 48 of them. Revenue for the quarter totaled $18.1 million, beating the consensus analyst estimate of $16.5 million. Still, Nikola remains unprofitable, posting a Q2 earnings per share loss of 25 cents, which beat the estimate for a loss of 27 cents.
The company is currently in the process of ramping up production in its Arizona factory. By November, it expects to build trucks at a rate of five per shift.
Nikola reiterated its earlier production guidance of between 300 and 500 trucks for 2022 during Q2 earnings. It also expects to complete prototype testing of its hydrogen fuel-cell truck with Anheuser-Busch (NYSE:BUD) and another fleet client.
On the date of publication, Eddie Pan did not hold (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.