Nikola shares fall after CEO didn’t reassure traders that GM gained't get out of a $ 2 billion deal
Nikola Motor Company Two trucks
Source: Nikola Motor Company
The shares of the competitive electric vehicle start-up Nikola Corp. fell more than 8% in after-hours trading after CEO Mark Russell failed to reassure investors that the company's $ 2 billion deal with General Motors was still going on and ousted founder Trevor Milton suddenly wouldn't sell his shares to sell.
During an interview on CNBC's "Mad Money with Jim Cramer," Russell said talks were underway with GM about the supply of fuel cell and battery technologies and an all-electric pickup truck, but he wouldn't go into much further detail.
"Both things are interesting to us," he said of GM's technologies. "We keep talking to them about these things." If a deal isn't closed by December 3rd, either side can go.
Russell also declined to speculate on what Milton, who stepped down as chairman in September, plans to do with the 91.6 million shares he owns after a lockup period that prevented him from cashing out his equity until December 1 . These include 6 million shares in "founder options" he gave to early employees and left 85.6 million shares. There are around 360.9 million shares in the company outstanding, making Milton Nikola the largest single shareholder.
All of these stocks can be sold next week, according to the company.
"I can't comment on Trevor, of course," said Russell. "But we believe that as we execute our milestones and business plan, we will reward our shareholders with a long-term focus. That is our focus, which is long-term."
Owners of 136.5 million Nikola shares agreed to extend their vesting period until April 31, including 39.8 million shares held by a separate company controlled by Russell but owned by Milton and T & M is called residual.
Milton resigned after the Justice Department and the Securities and Exchange Commission began investigating short-seller Hindenburg's fraud allegations in September.
Hindenburg accused Milton of making false statements about Nikola’s technology to grow the company and partner with auto companies. The report, titled "Nikola: How to Partner an Ocean of Lies with America's Largest Automaker," was released two days after GM announced a deal that skyrocketed both companies' shares in September. It characterized Nikola as "an intricate fraud based on dozens of lies" by Milton.
Nikola stock closed at $ 34.50 on Tuesday, up 17.3% for the day, and has continued its volatile phase since the company on June 4 as part of a reverse merger with VectoIQ, a special-purpose acquisition company Purposes, or SPAC went public.