Exactly. There is literally no downside for GM.
If it's a total scam and falls apart tomorrow, well - they didn't pay any money for the deal (aside from lawyer time). Oh well.
If they can sell off their stock grant, that's free money.
If they can actually make parts/vehicles for Nikola, that's even more money.
We're going to find out over the next few weeks that isn't the case. There is tremendous reputational risk here. This episode could throw into question EV capabilities for GM for years to come.
Don't be surprised to see heads roll all the way up in the C-suite at GM over this.
Nobody else is paying serious attention to the R&D ventures of the big automakers or at least if they are they aren't using it to influence purchasing decisions.
> In some cases, yes.
Now I'm curious. Can you give an example?
This is a pretty good overview to piercing the corporate veil. I suppose it's technically possible for a company to be liable for what a company they invest in does, but there would have to be some pretty weird circumstances (for example, if the two companies had substantially co-mingled finances and leadership).
I don't see any of it applying to the GM/Nikola deal.
When it was just Tesla it was fine for them to be bad at making EV. Now that VW and others are starting to get serious, they really need to make something happen.
Say what you will about Musk and Tesla (I know, I know), but their Class 8 Semi did a nationwide tour (under its own power) to potential customers  and also occasionally pitches in to perform vehicle deliveries , no downhill coasting required.
In the current situation, all investors will require substantial proof of working technology. No working tech, no new investment, the company will probably fold before paying back a cent to GM.
The best hospitals are likely in California. Doctors want to work in California so bad that they actually take LESS money. It's called the sunshine tax.
Of course it turned out to be a scam.
Group think and greed are powerful drugs for those unable to perform their own critical thinking/research.
If Nikola is an unexpected success, then they have a significant stake in it, and if they fail, then hopefully they don't have too many vehicles that Nikola hasn't paid for.
GM can definitely build a good electric vehicle. They cannot seem to market a good electric vehicle—see Chevrolet Bolt sales, and then ask a random person if they know what a Bolt is. So the Nikola investment is the equivalent of buying a hip design studio?
In the worst case, they were paid to do their own R&D.
Nikola basically bribed GM with a insane deal so they can say they have a GM partnership.
I am not involved in this world at all... but is this common? Can you really expose your own ignorance in this way and also manage to keep investors?
But the Nikola truck is more than just a fuel cell vehicle; it’s a rolling super computer. One of the key elements of Nikola’s advanced system is the Bosch Vehicle Control Unit, which provides higher computing power for advanced functions while reducing the number of standalone units.
"The entire infotainment system is a HTML 5 super computer," Milton said. "That's the standard language for computer programmers around the world, so using it let's us build our own chips. And HTML 5 is very secure. Every component is linked on the data network, all speaking the same language. It's not a bunch of separate systems that somehow still manage to communicate."
To spin the tyres you just need to add the CSS style:
animation:spin 4s linear infinite;
And reduce the duration to make the truck go faster..
So… a Bosch ECU? That's hardly new. Bosch is one of the largest players in the market -- Ford, GM, BMW, and VW (among others) have been using their ECUs for ages.
> "The entire infotainment system is a HTML 5 super computer," Milton said. "That's the standard language for computer programmers around the world, so using it let's us build our own chips. And HTML 5 is very secure. Every component is linked on the data network, all speaking the same language. It's not a bunch of separate systems that somehow still manage to communicate."
So the short answer is that no, you can't keep investors in the long run, but it takes time for journalists, watchdog groups, and federal agencies to do thorough investigations.
Listen to him talk about Nikola in interviews. In an interview he said "before WeWork it was really easy to get money but now investors ask more questions."
His interviews are filled with answers from this perspective and it's quite bizarre how no one noticed this.
I noticed that he also makes false statements in the video. Nikola has zero active routes,that's a lie.
Elizabeth Holmes was worth $5 billion at one point.
They'll take every dime this guy has, if it turns out to be a fraud. The Feds will particularly aggressively investigate such a prominent case. Such public cases make the Feds look bad (from their point of view), especially if they don't get the people responsible, so they tend to pursue them rigorously. They'll inevitably find something he did wrong, and he'll end up in the same spot that Holmes is in, spending all his time trying to weasel out of a prison sentence.
not sure about the rest of you, but i am investing in html supercomputer. could be bigger than quantum computing. spread the word.
> Nikola's fortunes are now tied to the success of the Nikola Two, Badger, and other products. If those products are successful, it probably won't matter that the Nikola One was never drivable.
I'm trying to figure out what is the difference between Nikola One and Two. By comparing https://nikolamotor.com/one and https://nikolamotor.com/two there doesn't seem to be any difference at all, apart from the pictures and videos. The specs are the same, technology is the same, performance is the same, all of the promotional text is the same, etc.
Lets not pretend short sellers arent willing to exaggerate their case against in order to make a quick buck. They are talking their book afterall. I would say whining is a sign of weakness more than dishonesty.
Sure. Both management and short sellers are. But structurally, the table is tilted in favor of management.
The problem are never short-sellers per se, bur rather the fabrications some diseminate to induce panics. Those guys that try to manipulate the market with false information should be vilified, not short sellers in general.
That rarely happens, in reality. It's just the boogey-man CEOs tell their investors at night so they can blame someone for bad stock performance.
There are strict rules against market manipulation and short sellers are under very large amounts of scrutiny. It's not uncommon for legitimate short sellers to get pressured/investigated by SEC/equivalents. (see Wirecard and BaFin)
Furthermore it's absolutely possible and in many circumstances likely that the price of a put decreases even if the underlying stock's price decreases, for example if the volatility also decreases.
I don't think many informed individuals treat shorting stock the same way they treat buying puts nor do they attempt to accomplish the same purpose.
I'm not familiar with IPO listings through SPACs, but do these type of listings go through as much DD as a traditional IPO listing? It seems that every step along the way, NKLA had avoided close inspection of it's actual IP and assets.
Nikola is actually a poor example of your point. Their stock price is still up since they IPOed. A retail investor could sell their shares now and be fine.
For example, Robintrack's data was very illuminating, almost every stock that made it to the week popular list was full of retail bagholders: https://imgur.com/a/LbvUOdi
Bet you thought I meant insiders. I'd run from stuff idiots buy!
Major KODK shareholders: https://finance.yahoo.com/quote/KODK/holders?p=KODK
Retail holds a small percent of pretty much anything, institutions dwarf retail.
Meaning they merged with an existing "blank-check" public company.
Discovering that Milton hired his brother whose previous experience was paving driveways, or that the chief engineer has no relevant prior experience isn't even deep DD. We shouldn't be playing the violins for retail investors on this one.
Generally speaking, knee-jerk reaction to create rules and regulations for every problem in society will only lead to further dysfunction, less growth, and permanently locking the little guy out.
"Behold, the 1,000 HP, zero-emission Nikola One semi-truck in motion. Get ready for the pre-production units to hit fleets next year in 2019 for testing. The Nikola #hydrogenelectric trucks will take on any #semitruck and outperform them in every category; weight, acceleration, stopping, safety and features - all with a 500-1,000 mile range!"
People were arguing about how Tesla's semi was dead on arrival because of these people.
It would be somewhat understandable if they'd be trying to weasel out of one or two issues.
But when all but a few of your rebuttals are "oh but in a strict technical sense, we didn't make the claims that Hingerburg is challenging", like "we never said the truck was under its own propulsion, the video was just called "in motion", or "the contract that we claimed was worth 250 million had an option that made it potentially worth 250 million", then that just underlines how much bullshit they have been spewing.
I think the issue the legal team faces is that many of the things Trevor says are clearly false and misleading.For example, he claimed multiple times that Nikola is generating 3.5 megawatts of energy from solar panels on their roof. There is simply nothing there, it is a bold lie so naturally it's not referenced in their response at all.
The entire company is built around mysterious battery tech that's twice as efficient as Tesla's batteries and hydrogen production at 18.75% of current cost.
That is the central fraud in the company just as the unrealistic notion of droplets of blood for reliable testing was at Theranos.
Eventually, if Nikola persists in trying use hydrogen they will face the technological and economic reality they've been hiding from investors and the company will fail.
Nothing that I've heard about this company makes me think it is at all equipped to properly handle that responsibility, and I'm adjusting my behavior to stay clear of that part of town.
"Hours of trial and error had helped the iPhone team develop what engineers called “the golden path,” a specific set of tasks, performed in a specific way and order, that made the phone look as if it worked."
Nikola's presentation was something else:
> "We will have a chain on the seats to prevent people from coming in just for the safety. I don't want someone to end up doing something and driving this truck off the stage," Milton said. "This thing fully functions and works, which is really incredible."
He specifically boasted that it was a fully working machine. That's a lie.
But I do see your point about what they're doing (overhyping the future roadmap) being quite common. IMO the people comparing this to Theranos are wrong. Theranos sold a product to consumers that didn't have the capabilities it was advertised to have, whereas this is a transparently stupid company without a single product or customer except for the founder's self-dealing at his house. A lot of retail investors are gonna be hurt by this, but it's not clear to me that it's fraud
Perhaps there should be some requirement to pay for independent professional witnesses, sort of like observers who validate Guinness world records as having met some (negotiable) standard of existing in the real world while being bound not to comment on the specifics of how it was achieved.
> "Nikola never stated its truck was driving under its own propulsion in the video," Nikola wrote. "Nikola described this third-party video on the Company’s social media as 'In Motion.' It was never described as 'under its own propulsion' or 'powertrain driven.'
Further, internal emails not just public statements are often used to decide if something was intended to deceive or not.
I’m not trying to defend them, but at that stage of the (private) company, if they were honest with investors then is there an issue? Where is that line? If they weren’t honest with them, then that’s a whole other story.
(And I’m not sure you can assume they were in fact honest with investors.)
(Because if they were public, that would be a problem...)
but the article indicates "When Nikola Motor Company founder Trevor Milton unveiled a prototype of the Nikola One truck in December 2016, he portrayed it as fully functional."
So there you go!
But the very idea that "yeah, you're right on all the facts, its just that we didn't really 'lie'" isn't a great defense of the business
I guess you ought to kick the tyres on the real thing though.
It's definitely not a good look though.
To me, the whole NKLA situation feels like a giant Kickstarter scam.
> contributing to global warming is securities fraud, and sexual harassment by executives is securities fraud, and customer data breaches are securities fraud, and mistreating killer whales is securities fraud, and whatever else you’ve got. Securities fraud is a universal regulatory regime; anything bad that is done by or happens to a public company is also securities fraud, and it is often easier to punish the bad thing as securities fraud than it is to regulate it directly.
The problem is, who was defrauded? The investors, I guess, but if they sue then they can only collect money from the company that they own anyway. It's not obvious that's a money-gaining proposition.
Presumably it would not be feasible to collect large sums from the officers, but they frequently do have D&O insurance policies that could kick in (https://en.wikipedia.org/wiki/Directors_and_officers_liabili...)
This is why people have been so critical of Elon Musk. Elon Musk's flippant behavior engenders worse and worse.
Well, we do have laws about
* False Advertisement
* Investors' Fraud
Unfortunately they are not applied, or not applied consistently; and this is just one of the many examples that I come across on a weekly basis.
What makes matters worse is that when talking about it with people at work or so, they don't seem to care enough and feel it's not a problem.
It is a problem, it's a slippery slope into lawless chaos.
If such laws exist, they aren't worth the paper they're printed on.
And as long as that's the case, people crazy and risky enough to become startup founders will never be persuated not to do it.
"We’re building an AI-powered writing assistant that helps people communicate and connect"
Compared to AI "Full Self-Driving Capability" isn't any more implausible. Yet we don't call those AI companies fraud.
This is how Tesla marketing Model 3's Autopilot. Marketing speak for sure, but lie?
"Autopilot enables your car to steer, accelerate and brake automatically within its lane. Full Self-Driving Capability introduces additional features and improves existing functionality to make your car more capable over time"
Nowhere does Tesla claim that their cars currently have the ability to do "Full Self-Driving".
They sell a package which promises, in the future, to enable "Full Self-Driving" on the associated car.
1. I don't know. I guess that's the risk people take when they buy the FSD package without a guaranteed date.
2. It's not clear to me that your average life numbers apply to Teslas.
In Germany, we have the "Gesetz gegen den unlauteren Wettbewerb", roughly translated as "law against unfair competition". It's a pretty old piece of law (1896), but unlike other laws in Germany this one is held reasonably up to date.
Stuff like we see here would be flat out prosecutable by any competitor.
In the case of something like Theranos, I thoroughly agree. Oversight of a commercially available product, especially one with health implications, is definitely necessary. Although it seems even these systems failed in the Theranos case.
If they say they're going to sell trucks, and they present a truck doing truck things (moving), most people would assume it's a complete truck as portrayed. An empty shell is just fraud in the court, hopefully.
It's not a good look, but you also shouldn't be investing based on what amounts to a commercial. This should be another stain for the company and another warning sign for investors, but we don't need a law against misleading promo videos because almost all are short on information and high on emotion. It's the investor's job to get the information behind the video.
As an example, if you apply for a bank loan and falsify the application, you can still be charged with fraud and go to jail even though the bank potentially could have discovered the falsehood by hiring an investigator before issuing the loan.
I hope you are WELL capitalized to prepare for pain. First, this stock has surely reached HTB status (hard to borrow) and so it is going to be very expensive, prohibitively so depending on timing, to borrow these shares for your adventure for any decent amount of time.
And don't worry, you aren't the only person who will be shorting these shares, which means there's gonna be months of fu*kery going on regarding this company and it's stock. There are already people lining up on the other end of this in anticipation of the fun, and when crazy news hits, or something short term favorable happens, the short squeeze will be on. This is where you are going to need to be well capitalized.
I've decided to play this one in the options market with a defined time horizon. Even though, like the borrowing shares market, there is significant expense associated with this trade because of super high implied volatility, I still think there is upside, with defined risk instead of unlimited risk like straight shorting the shares.
I've decided to purchase 1/15/2021 Calls and Puts on this stock, and let it go to zero in the end.
Nikola doesn't even have a functional prototype as far as I'm aware, the best they have is a truck that can drive at what looks like 20mph while towing nothing, and I'm giving them the benefit of the doubt that it is actually running on an hydrogen fuel cell.
A large reason for the market strangeness is the helicopter money from the Fed and the essentially zero interest rate environment. The helicopter money might end soon, but the crazy low interest rates might be here to stay. We might have to redefine what the fundamentals are.
Nikola has no battery edge. Their hydrogen tech is vaporware - after more then 20 years of massive public and private investment in Japan and Germany, Hydrogen failed to achieve a competitive position in the marketplace. Hell, it has been 17 years since Bush Jr announced his plan for a "Hydrogen economy" - nothing materialized.
Hidrogen is dead an buried, not coming back. Nikola has no propulsion in a market where even the company that has the best electric propulsion - Tesla - is struggling to put a compelling semi.
I think the question might just be the ratio of capital.
Tesla Motors was a thing before Elon was involved.
Did "Hindenberg" really say that the hydrogen fuel cell wasn't working?
I know a founder fitting that description that was put through hell because of all the pattern matching. And in my own startup, there was a point where I just straight up stopped mentioning microfluidics because of all the nonstop pattern matching and the dumb questions that resulted. Its so frustrating.
couldn't they just put in battery&motor from golf cart? Or, god forbid, from a Tesla :)
>In October 2019, Nikola announced it would revolutionize the battery industry. This was to be done through a pending acquisition, but the deal fell through when Nikola realized (a) the technology was vaporware
you don't say.
Looking at all that gold rush and Alibaba prices i wonder may be i should start a EV company too. Don't need $20B, i think i can retire comfortably with 3 orders of magnitude less :)
Back when I was at Dev Bootcamp, before that shut down, some car company came to shoot a car commercial in front of the building. People were expecting to see some cool cars and action on the scene, but I rightly predicted that there would be filming of backdrops, some green screens here or there, all done in a few hours, and no actual cars.
Having looked at the video, I see no reason why they needed a real truck, even if they actually have a prototype. Are they just cheap as f*?
As silly as this sounds, it very well may be a cost factor - I am desperately seeking the article but I have read that car commercials actually use a highly advanced form of CGI that is incredibly, jaw-droppingly expensive.
I mean, we could assume they just wanted to be honest and show the real thing; but we obviously know they had no interest in being honest whatsoever and it was obviously designed to mislead.
If you need a one-off video, it’s cheaper to not use CGI.
- Nikola CEO
It does not look fake.
Your video is from 2020, so all statements can be true at the same time. Nikola likely lied about having functionality for years, but now they do have some functionality.
Also, probably radiators for the above.
Bill Ackman is probably the most famous person doing this.
>In the United States and most non-European jurisdictions not all trading on non-public information is illegal insider trading. For example, a person in a restaurant who hears the CEO of Company A at the next table tell the CFO that the company's profits will be higher than expected and then buys the stock is not guilty of insider trading—unless he or she had some closer connection to the company or company officers. However, even where the tippee is not himself an insider, where the tippee knows that the information is non-public and the information is paid for, or the tipper receives a benefit for giving it, then in the broader-scope jurisdictions the subsequent trading is illegal.
Basically, so long as the text exchange wasn't given to Hidenburg in return for some kind of economic favor, there isn't a legal issue.
Insider trading isn't about making the markets fair and giving the same information to all investors. It's about stopping people from trading on information they don't own - i.e. with information owned by the company itself.
If I fly a helicopter and see oil levels in BP's oil tanks, I can trade on that information just fine, even if I mighjt be the only person with that info. If BP calls me up and tells me what their oil levels are in the same tanks, I can't trade on that information, because it was obtained from the company.
Don't lie. You've faked a demo before.
"In October 2019, Nikola announced it would revolutionize the battery industry. This was to be done through a pending acquisition, but the deal fell through when Nikola realized (a) the technology was vaporware and (b) the President of the battery company had been indicted months earlier over allegations that he conned NASA by using his expense account to procure numerous prostitutes.
Nikola has never walked back claims relating to its battery technology. Instead, Trevor continued to publicly hype the technology even after becoming aware of the above issues. The revolutionary battery technology never existed – now, Nikola plans to use GM’s battery technology instead."
"Inexpensive hydrogen is fundamental to the success of Nikola’s business model. Trevor has claimed in a presentation to hundreds of people and in multiple interviews to have succeeded at cutting the cost of hydrogen by ~81% compared to peers and to already be producing hydrogen. Nikola has not produced hydrogen at this price or at any price as he later admitted when pressed by media." 
Tell me again how this is not like Theranos?
Is that also a lie? Because that's exactly what Steve Jobs did when he debuted the iPhone.
How is that a lie? On release day, when you got your iPhone, you got exactly what was demoed, not one feature was missing. As an Apple investor I would have no way to know what did and didn't work during that demo, and I wouldn't care because I got exactly what I was promised. I also would not expect everything to work, otherwise why would the release date be 9 months after the demo?
And when making that demo, Steve Jobs was convinced (and he made sure he was right) that everything he was demoing would be ready by launch. He did not pretend that the iPhone could do something he very well knew wasn't possible.
Trevor Milton promised things that he knew he would not deliver. He promised things that his company did not do, was not planning to do and did not have the capability to deliver.
Where is the Nikola One today? Where is that revolutionary battery that he promised even once he cancelled the deal to buy that (non-existent) tech? Where is that hydrogen he said he was already producing years ago?
Those two things are not remotely comparable.
It doesn’t change that it’s still working software and doing everything its being shown to do (just not capable of doing things that aren’t being shown or demoed).
The equivalent of the truck stunt would be if the iphone demo were just a CGI video of an “iphone” but it was actually just a green-screen piece of metal.
2) The faked demo is only the icing on Nikola's shit cake. I advise you read the Hindenburg report. Trevor is a serial liar, a true con-artist.