Nikola Stock Plunges With Founder in Even More Hot Water

The company did report better-than-expected quarterly results, however

Assistant Editor
Feb 26, 2021 at 10:28 AM
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Things were looking up for electric vehicle maker Nikola Corporation (NASDAQ:NKLA) following the release of the company's fourth-quarter results, which were better than Wall Street predicted. However, a recently released Securities and Exchange Commission (SEC) filing shows Nikola founder Trevor Milton, who left the company in September following fraud claims, made several misleading statements regarding the company's technology. Nikola previously denied the inaccuracies it relayed to the public, but the company is paying $8.1 million in advanced attorney fees for Milton -- part of the overall $27.5 million the company is shelling out related to regulatory and legal matters. In response, NKLA is plummeting, down 10.7%, last seen trading at $18.89.

On the charts, the stock has been steadily slipping since rising to $30.40 on Jan. 27 -- its highest level since late November. Plus, the shares just breached their 60-day moving average, which served as support for most of this year. And over the last six months, NKLA has shed 54.3%.

Following the earnings release, at least one analyst chimed in with a bear note. Specifically, J.P. Morgan Securities hit NKLA with a price-target cut to $33 from $35. Coming into today, the majority of brokerages were pessimistic toward the security. Of the eight in coverage, five rated the equity a tepid "hold."

Short sellers, meanwhile, have started to hit the exits. Short interest is down 39.1% during the last two reporting periods, but the 32.06 million shares sold short still make up 21.1% of Nikola stock's available float.

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