It’s a headline-grabbing day for electric vehicle (EV) manufacturer Nikola (NASDAQ:NKLA), but not necessarily in a good way. According to a Bloomberg report, Nikola founder Trevor Milton was convicted of securities fraud as well as wire fraud. Amazingly, though, NKLA stock floated into positive territory this morning.
This could be considered an unfortunate ending to Milton’s plot trajectory as a celebrity entrepreneur. He founded electric truck maker Nikola in his basement back in 2015. Then, in 2020, Milton took the company public and Wall Street assigned Nikola an eye-popping valuation of $3.3 billion.
It didn’t take long for high hopes to devolve into controversy, however. Short-selling firm Hindenburg Research released a scathing report in September 2020, accusing Nikola of deceptive practices. Accompanying that report was a notorious video, allegedly showing a Nikola truck rolling down a hill instead of accelerating on its own propulsion.
Milton resigned from Nikola soon after the Hindenburg report was released. Fast-forward to July 2021, and prosecutors in New York charged Milton with defrauding investors in order to inflate the value of NKLA stock.
Perhaps it was only a matter of time before the other shoe would drop. And, it dropped hard today — even if the Nikola share price didn’t.
NKLA Stock Remains Resilient Despite Conviction Bombshell
As reported by Bloomberg, a federal jury in New York convicted Milton of two counts of wire fraud plus one count of securities fraud. The charges could put Milton in prison for up to 20 years.
A social media post quoting U.S. Attorney Damian Williams indicated that he would not tolerate Milton’s malfeasance. “Trevor Milton lied to Nikola’s investors — over and over and over again. That’s fraud, plain and simple, and this Office has no patience for it,” Williams wrote.
Meanwhile, Nikola released a statement that emphasized the automaker’s future prospects. “We remain committed to our previously announced milestones and timelines and are focused on delivering Nikola Tre battery-electric trucks later this year from the company’s manufacturing facilities,” Nikola’s statement asserted.
Despite all of this controversy, NKLA stock was flat to slightly green at 10:30 a.m. Eastern this morning. It’s possible investors don’t associate Nikola with Milton much anymore. In any case, this seems like a positive sign as Nikola’s shareholders appear to be focused on the company rather than its now-convicted former founder.
On the date of publication, David Moadel 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.