Nikola founder Trevor Milton has stepped down as executive chairman after a short seller accused Milton and the hydrogen and electric truck startup of misleading investors and overstating the value of a business deal.
Milton has also resigned from the company’s board, Nikola said in a statement on Sunday. The company has previously denied the allegations and threatened legal action against the research company that made them.
Stephen Girsky, a former vice chairman of General Motors (GM) and current board member at Nikola, will take over as chairman, effective immediately.
“The focus should be on the company and its world-changing mission, not me. I intend to defend myself against false accusations leveled against me by outside detractors,” Milton said in a statement posted on Twitter.
As part of the transition agreement that Nikola filed with the Securities & Exchange Commission, Milton agreed to revise any references to the positions he held at Nikola on his social media profiles so it’s clear he no longer holds them. He also agreed to check with lawyers for Nikola before posting anything about the company. By late Monday morning, Milton had made his Twitter account private, but his LinkedIn account remained public and active.
Hindenburg Research, which makes money by betting against companies, published a report earlier this month alleging a range of misdeeds at Nikola, including that Milton presented a prototype truck as being closer to market than it was. The report also said that Nikola mischaracterized a business deal as being worth more than it was.
Shares in the company had already dropped by more than 19% in the days since the report was first published by Hindenburg. After Martin stepped down on Monday, they fell by more than 18%.
“These allegations by the short seller are false and misleading, and designed to manipulate the market to profit from a manufactured decline in Nikola’s stock price,” Nikola said earlier this month in response to a number of Hindenburg allegations.
Nikola said at the time that it had hired a law firm to explore legal action against Hindenburg and that it planned to bring the matter before the US Securities and Exchange Commission.
“While founder Trevor Milton’s departure may give the appearance of a company that’s moving on, we believe this is only the beginning of Nikola’s unraveling,” Hindenburg Research said in an emailed statement following the announcement of Milton’s departure Monday.
Nikola declined to respond to Hindenburg’s statement.
In the days before Hindenburg published its report, Nikola received a boost from General Motors which said it would help the upstart develop its new models in exchange for an 11% stake. GM had agreed to develop and build Nikola’s Badger pickup which, under the terms of the agreement, would utilize GM technology almost exclusively.
GM (GM) executives had earlier said it had conducted “appropriate due diligence” before signing the agreement with Nikola. Shares of GM (GM) were down more than 6% Monday following the announcement.
“We will work with Nikola to close the transaction we announced nearly two weeks ago to seize the growth opportunities in broader markets with our Hydrotec fuel cell and Ultium battery systems, and to engineer and build the Nikola Badger,” GM said in a statement Monday morning.
Girsky brings an extensive background on Wall Street to the top job at Nikola. Before joining GM as a special adviser in 2005, he had spent a decade as managing director and auto analyst at Morgan Stanley. He also served as an executive at investment firm Centerbridge Partners.
— Matt McFarland contributed to this report.
