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We View Nikola’s Response as a Tacit Admission of Securities Fraud (hindenburgresearch.com)
124 points by samizdis 11 days ago | hide | past | favorite | 123 comments

> "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."

[1] https://www.truckinginfo.com/330475/whats-behind-the-grille-...

Was curious what GPT-3 would come up with. Italics are my prompt, the rest of the comment is GPT-3.

You are a reporter interviewing Milton, owner of up and coming automotive manufacturer Nikola, currently being investigated for securities fraud.

"So what exactly is the problem?" you ask.

Milton looks at you as if he doesn't quite understand your question, but then smiles. "The entire infotainment system is a HTML 5 super computer," Milton said. "That's the standard technology now."

"What does that mean?" You ask.

"It means it can do everything a human brain could ever want to do, and more!" Milton says excitedly. "You want to watch Netflix? You got it. You want to browse the internet for weird fetishes that will make you feel dirty? You got it. You want to play some games? You got it."

You don't really see the point in having such a system, but you stop yourself from saying anything.

"Why would anyone want all those things in their car?" You ask.

"Don't you think it would be handy to watch movies while driving?" Milton asks.

That’s probably just a misunderstanding. What Milton meant to say was that the infotainment system ran on HTML5, aka Electron, and it required a super computer.

Im sure if in future if super computers manage to become consumer money friendly, electron and electron using devs will manage to make it hang itself too.

I know all those words but the sentence still baffles my brain.

Word salad.

I absolutely love the phrase "HTML5 supercomputer".

That's up there with describing your Wordpress as "a globally-connected information transfer system"

That's a lot more accurate than the HTML5 statement though, right?

It's the most accurate part of his statement. Everybody is walking around with portable supercomputers.

They are only supercomputers in comparison to 1970s hardware. Today, they are just average computing devices.

Modern smartphones would make the early 90's top 500.

iPhone 11 (A13 Bionic): 154.9 GFLOPS [1]

Intel Paragon XP/S 140 (#1 on the top500 list in June 1994): 143.4 GFLOPS [2]

Don't know whether to marvel at how fast a modern smartphone is, or how "slow" old supercomputers were.

(Yes, I realize GFLOPS is probably not the best comparison and I have no idea where gadgetversus.com even gets its numbers from, but I think they're at least in the ballpark).

[1] https://gadgetversus.com/processor/apple-a13-bionic-specs/

[2] https://top500.org/lists/top500/list/1994/06/

OT: I've wanted to make a simple chip simulator that runs entirely in a browser for a while now.

Just wait until they figure out how to write a Visual Basic GUI to track the IP!

But does a Visual Basic GUI allow you to create your own chips? Can all its components communicate over the data network?

With COM+ they can.

I used to work at this place where I had to apply thermal transfer to a solution of sodium chloride in dihydrogen oxide, wherein I submerged a quantity of helicoids made out of polymeric carbohydrate, increasing their ductility by several magnitudes.

It was a highly proprietary process, but I later found out that everybody was doing it this way.

Several magnitudes?!

Ok is this actually real? Is truckinginfo.com a reputable site? That quote sounds so outlandishly crazy I'm hesitant to believe someone actually said that.

The journalist seems to be real [1], and that website has been around since 1999 [2], and they've published a magazine "Heavy Duty Trucking" [2] since that time too. I think it's a legitimate niche magazine/site, yeah. It's possible the journo misquoted him I guess? But that's so outlandishly incoherent they've have demanded a correction, no?

[1] https://www.linkedin.com/in/truckinjim/

[2] https://web.archive.org/web/20000612021454/http://www.trucki...

The author is just not an expert in this field. This is - for the most part - what Hacker News sounds like when there are discussions outside of computer science.

> The author is just not an expert in this field. This is - for the most part - what Hacker News sounds like when there are discussions outside of computer science.

If only it were just that. He appears to be a con-artist. It's always interesting how things can sound similar and have entirely different intent and reasoning behind them.

This guy knew he was spouting lies while talking about the HTML supercomputer (assuming it's a correct quote from the trucking site in question). He has now been caught doing it repeatedly and to a rather dramatic scale. His interviews are full of half truths and dodges. It appears to be the Theranos playbook: try to get to a certain line where some product finally becomes real, before the clock runs out on the con.

Intentions matter a lot. There's obviously a vast difference between someone quite innocently discussing / opining outside of their knowledge lanes on a hacker news forum, and someone intentionally spinning an epic scale multi-billion-dollar fraud in the name of the profit motive.

The point being, if someone is talking outside of their lane on HN, I have essentially zero inclination to think they're knowingly attempting to commit fraud (intellectual or financial) in the process, as on HN it's almost exclusively a common, innocent form of ignorance at play. As contrasted with the intentional deception of a con-artist.

I get your point, and agree. But I was saying the author (Park) allowed the quote from Milton (speaker of the "HTML5/supercomputer" quote) to run because he wasn't a domain expert in computers and software, rather that pushing him on it or not publishing that part.

Especially finance, I might add.

Is that an exact quote or a summary?

Having talked to reporters before, there is a possibility that something more reasonable was said but then got garbled. Like, if during the interview someone said the UI is using HTML5, which is standard everywhere, so it will be easy for people to extend / we have lots of options; and also we're using ARM so we can build our own chips; ARM is in everything from smartphones to supercomputers. I can totally see a non-tech reporter getting confused and morphing that into the sentence above.

Obviously the other outlandish / false claims make it more likely that this is an example of BS as well.

I've seen it a few times elsewhere. I should really just quit my job and become rich by bullshitting investors with technobabble.

>I've seen it a few times elsewhere

A cursory search on google shows that all the references link back to truckinginfo.com, so I wouldn't put too much weight on that.

This guy is a billionaire, I'm spending my time on the wrong things it seems

On paper, for another 15 minutes maybe.

If the situation with Nikola is really as bad it looks right now, he's going to be spending the next few years trying to stay out of prison as the Feds turn his company inside out, investors start filing lawsuits (claiming they had no idea what was really going on), and someone starts writing a best-selling book about all the fraud that went on. I don't think you want his future. That paper net worth could quite easily be negative a year or two from now, with various assets seized, civil lawsuits, and so on.

I read the article thinking maybe some context in it would help explain that paragraph a little, but nope, it’s pure bunkum.

I... just... wow.

I can't believe what I just read! Thanks for sharing :/

I use HTML 5 kernel too. It is great! /s

The great thing is that you can customize your kernel panics using state of the art CSS 3.0! It's so state of the art, you can even use animation and gradients!

Do you build your own chips though?

Can I use my air fryer to make those chips? I can't decide between corn or potato though. Any suggestions on pros/cons?

let me try to decipher this, maybe he explained it poorly.

> That's the standard language for computer programmers around the world, so using it let's us build our own chips.

I guess he means that they built their own infotainment on HTML5 instead of some proprietary commercial car infotainment technology which would also come with its own chipset. So now they can use their own chipset as long as it can run HTML5.

> 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.

I guess it means they built a standard data bus for the car and every component can subscribe/publish to it.

That's pure self-contradictory nonsense. Not proof of fraud though, just proof of ineptitude.

His speech target: Corporate know-it-alls.

That is a patient, clinical, point-by-point dismemberment of Nikola's supposed rebuttal of Hindenburg's original document. Superbly done, and surely devastating.

This story just keeps on giving.

The fact that NKLA remains as high as it does really is proof of a "post-fact" world, as a sibling commenter put it.

Take a look at Twitter, and it's pretty sad IMO to see some of the "I still believe in you Trevor!!" type responses, completely devoid of any logic looking at the actual facts. It's like these kind of cults are everywhere now.

And my take on the stock price remaining as high as it is is that there are a relatively small number of cultish-believers (maybe 5-20%, I really don't know beyond that it's a small minority), and then everyone else pretty much knows this stock is a fraud and is eventually going to 0, but is just trying to time it so that someone else is holding the bag. Very similar to how Hertz spiked after they filed for bankruptcy: pretty much everyone knew they were going to 0, it was just a bet on who could time it best.

Trevor Milton bought $1.3 million dollars of shares yesterday. He's trying to keep the share price up to support the narrative that nothing is wrong

In today's post fact world, is anything truly "devastating"?

Ask WireCard

After Theranos and Wirecard, I'm surprised how much benefit of the doubt Nikola is being given

> After Theranos and Wirecard, I'm surprised how much benefit of the doubt Nikola is being given

Thank Elon.

His war on shorts has created a narrative that's gotten eaten up in the tech sector. Heck, you can see it in the comments on this post.

We poor tech companies are just the victims of these big, bad, evil short sellers. If you'd just leave us alone, man, so much disruption! We just need a few more billions and, we swear, we'll be profitable in no time.

Edit: Apparently people are getting very confused by the point I'm making here.

I'm not saying Telsa and Nikola are equally fraudulent.

I'm saying Elon Musk is responsible for pushing and promoting a narrative to de-legitimize short sellers, and in doing so, has undermined an important function in the markets that helps prevent companies like Nikola and Wirecard from succeeding in defrauding the public.

Actually, people with engineering backgrounds see a huge difference between Elon and this guy. It is Wall Street who doesn't understand and is afraid to get burnt by NKLA the way other naysayers were burnt on TSLA.

> Actually, people with engineering backgrounds see a huge difference between Elon and this guy.

I didn't say Elon and this guy were similarly shady.

I said Elon has been a huge voice in pushing and promoting a narrative that short sellers are evil, and that then allows frauds like Nikola and Wirecard to flourish.

And I stand by that statement. In what way am I wrong?

TSLA has sued NKLA for IP theft. I have a hard time seeing how they are pushing a narrative that short sellers of NKLA are evil.

This story just gets crazier and crazier.

Elon has been pushing conspiracy theories about short sellers for years. As a direct consequence of this, there are many commenters on this site who believe that short selling is generally nefarious and some who even think it should be banned altogether.

Funny how the possibility of a lying short seller gets all their consternation while lying CEOs do not.

In case of Tesla we have pretty well document case of short-sellers doing exactly what Elon said. Paid anti-Tesla articles were absolutely a thing that happened. Not to mention a constant stream of other FUD and accusations of fraud.

Tesla has revenues - real revenues at least. They have real products. Nikola? What do they have? Is it their hyrdrogen breakthrough (10% of current cost)? I doubt that's real. Their battery breakthroughs? Again, pretty doubtful that's real.

> Tesla has revenues - real revenues at least. They have real products.

So did Enron. That doesn't mean there's no fraud to be found.

> Before its bankruptcy on December 3, 2001, Enron employed approximately 29,000 staff and was a major electricity, natural gas, communications and pulp and paper company, with claimed revenues of nearly $101 billion during 2000.

Much of that apparent revenue was fraudulent, but not all of it. Enron really was an energy company, but was also engaging in fraud.

Tesla short sellers (TSLAQ) delegitimized themselves pushing nonsense narratives that repeatedly turned out to be false. Nikola's short sellers' research is of far better quality.

Literally got investors because their name sounds like Tesla lol

Early on in the pandemic a company with the stock ticker "ZOOM" boomed despite being completely unrelated to the communications software (whose ticker is "ZM").

That literally should have been a red flag from the get go. What ultimately successful company names themselves based on a leading competitor?

If you look at the HN discussion about Nikola four years ago, it's filled with people pointing to the copycat name as a redflag. So even without hindsight, this was obvious.

> They could have tried a little harder with the name. It makes me take them less seriously with a copycat name like they're not confident enough in their product and need to glom onto Tesla's success. What an awful decision. The truck looks neat, though.

Response to the above:

> I don't think that truck is ever seeing the light of day; the name and the rest of it all seems incredibly unlikely to materialize except as some money in someone's pockets."

Just to show how absolutely demented our financialized economy has become, look at the stock of Tiziana Life Sciences this year, with stock symbol TLSA:


You think it's because the ticker is similar to TSLA? They are trying to develop treatments related to COVID-19, I bet that's the real reason it spiked this year. I don't know anything about the company, just took a minute to look at their website.

Several stocks have seen that kind of spike due to Covid, so it's quite plausible it was just Covid.

Sorrento (SRNE) went from $1.70 in March to $19 due to peddling Covid this and Covid that (currently at $7 with a $1.78 billion market cap).

Moderna (MRNA) went from $18 in February to $95 at the peak of Covid vaccine mania. At the top it had something like a $37 billion market cap, which is not much below Biogen's $44 billion market cap (Biogen has $14 billion in sales and $7 billion in operating income).

It is literally Nikola Tesla's first name.


Tesla, the electric car company is his last name. Nikola is his first name.

edit: Spelling

These are all indicators of a problem in the market.

At this point it seems like Nikola is not at all what it seems, but I've actually been surprised in the opposite direction.

For a couple days, news of Nikola being fraudulent were all over everywhere, and when I finally clicked on the link, it's from... someone who is obviously shorting the stock. Every short seller ever tries to convince everyone that the companies they're shorting are doing all sorts of shady stuff.

In this case, everything in the report looks legit, but the number of people credulously citing this report without anyone mentioning that Hindenburg has a massive financial incentive to have Nikola implode has been surprising.

Hindenburg has been pretty upfront about their short position, as has most reporting.

OTOH, short sellers actually have skin in the game, they're putting their money where their mouths are. It's an important mechanism in the public market, which counteracts the existing bias in favor of stock value appreciation on account of shareholders endlessly shilling the stock.

But that's standard, no?

The only organizations that publish equity research are investment banks (which rarely publish negative articles since they want to be part of potential future M&A activity), and hedge funds.

This type of research takes significant time and effort, and almost no one else does this except short selling hedge funds.

Nobody has mentioned they are a short seller? Every article I’ve seen about it mentions it, and Hindenburg themselves are clear about it.

You should certainly take that into account when analyzing their report, but it does not mean they should be disregarded.

The following two things can both be true: 1) The short sellers exist to build bad press to drive down valuations so they profit by short-selling and engage is very shady practices to do so. 2) Fraud has occurred at Nikola.

Unlike Tesla and the never-ending $TSLAQ "Tesla is nothing but fraud", it appears that they really have something here with Nikola, even though my knee-jerk reaction to the short-sellers is one of mostly disgust.

> Unlike Tesla and the never-ending $TSLAQ "Tesla is nothing but fraud"

I think the problem is people don't understand what fraud is. Fraud does not mean fake. A company can have products and still be a fraud. A CEO can lead a multi-billion market cap company and still be a fraud.

In fact the most successful frauds rely on having a real semi-viable company built around the fraud because it becomes easier to perpetuate the fraud.

Nikola was on that path too. How far would it have gotten without the vehicle demo? Without the factory? In there, there's quite likely the seeds of a viable company, but they did not achieve escape velocity (e.g. sheer cash reserves, cult of personality, and share price) fast enough to keep the press away from fraud.

If financial journalists were as vicious with other companies that the short seller community has mountains of evidence against, then half the Chinese companies on the US markets would be gone.

But there were no legitimate reasons to believe that Tesla committed any kind of fraud.

Why do you dislike short-sellers? I think it's wonderful when they're pointing out the emperor has no clothes!

In order to have a functioning market, we need to base valuations on more than just "stonks go up".

Seriously Wirecard was sniffed out by so many short sellers, and eventually shorting it was banned... look at it now.

The regulatory process failed but was revealed. Hopefully Germany will do better.

But the US has more companies and activities going on and likely more fraud just by volume if not the regulatory capture and other issues from the current administration like secretaries who want to dismantle their departments. The administration itself is fraudulent, laundering campaign money to private property or court/lawyer costs, or simply rewarding friends like the current USPS head donating a bunch of money to the GOP then getting their position while holding millions in stock of USPS competitors. It's just so blatant and corrupt but nothing happens.

Same rhetoric, companies, securities, politics.

Everyone with the right ideas, the right motions, is always attempted to be silenced.

Life really is a circle.

A big part of private equity getting to insane valuations like WeWork is that nobody can short it.

Nothing wrong with healthy debate and dragging things into the sunshine. And there's obviously some fraud going on here.

But when shorts simply make up stories out of spite or manipulation, like those guys screwing with Tesla calling it fraudulent, it's exactly like pump and dump in reverse. The difference might be that shorts are stuck when a stock is rising legitimately and have no recourse but to use fabrication.

"Pump-and-dump is an illegal scheme to boost a stock's price based on false, misleading or greatly exaggerated statements" - Investopedia

> But when shorts simply make up stories out of spite or manipulation

Well it's a good thing that's illegal and there are whole departments in the US government that exist to deal with it.

Funny, though, that there hasn't been (edit: m)any securities fraud investigations of short sellers in recent memory.

Makes you wonder who the real liars are: the shorts, or the targets of them?

Can't leave that hanging... have any details?

Details about what? Examples where the shorts were right and the targeted companies were full of it?

Is Nikola and Wirecard enough, or do you want me to go digging for more examples?

No, wondering about the case where the shorts were acting in a public and illegal manner and the SEC did not indict anyone. Is that not an SEC priority or is there a policy to let it go? Is there more "untouchable" aspect going on? Is the bar of proof too high? They certainly have gone after insider trading in recent times.

What, you mean like this guy?


> The SEC’s complaint charges that Gregory Lemelson and Massachusetts-based Lemelson Capital Management LLC issued false information about Ligand after Lemelson took a short position in Ligand in May 2014 on behalf of The Amvona Fund, a hedge fund he advised and partly owned.

Or maybe this guy?


> The SEC alleges that five months ago, Berliner disseminated the false rumor through instant messages to numerous individuals, including traders at brokerage firms and hedge funds. The false rumor also was picked up by the media.

Creating a successful business is hard enough. The last thing you need is someone trying to make the case that you are going to fail at every turn. It is one thing to point out fraud like Theranos and NKLA, it is another thing to kick someone when they are down especially if your attack pushed the company into bankruptcy.

That comes with the territory of entering public markets though. If you don;t want to handle that kind of scrutiny, stay private and raise private equity or aim for a slower growth rate you can fund. Short sellers are good for the nature of the market they participate in.

> Creating a successful business is hard enough. The last thing you need is someone trying to make the case that you are going to fail at every turn.

Funny how the business gets all the sympathy, here. Meanwhile, the stockholders--i.e. all of us--get screwed if a fraudulent company doesn't get exposed.

If a company goes public, the public has every right to scrutinize it and ensure they're above board. Short sellers play a critical role in providing that kind of scrutiny.

Companies can profit through abuse of an information imbalance. The short sellers have an economic incentive to look behind the curtain and find these abuses. They can provide a service to the market or,they can act unethically and put out false information.

>The last thing you need is someone trying to make the case that you are going to fail at every turn.

Isn't that called your mom for deciding not to become a doctor?

Looks like next Theranos to me. You have to give credit to the guy though since he is showing how easy it is to fool the so-called "smart money".

After reading his wikipedia page it's mind-boggling to me that this guy was trusted at all. He's literally a (failed) car salesman!

yeah, Nikola pretty much admitted they lied

It's interesting that everything they have done is not PROVABLY fraud, and yet is on the very line between slightly unethical and actually illegal

pretty crazy

The article here seems to make a decent case that the fraud is provable, no?

When something is in a gray area, perception of facts depends on your point of view.

As someone not personally involved, I find things like this and Theranos fascinating. I'd love it if Theranos was real; Holmes obviously played on that very well. Green tech is also prone to this effect.

Add to that the "fake it till you make it", and "only cheerleaders allowed" attitudes at startups; the "reality disruption zone" of founders, etc, etc.

Are you stopping another Theranos, or are you killing another Tucker?

Disclaimer: I work for GM, but not on anything related to Nikola. I have no personal knowledge about Nikola from work.

Personal Opinion: Nikola is in the darker side of the gray area; I think there could still be good outcomes, but it looks pretty marginal.

Well the truck works if you roll it down a hill , who needs hydrogen or electricity when you can just use good old free gravity.

Next up ... perpetual motion.

> Nikola’s Response Had Holes Big Enough to Roll a Truck Through.

Love it.

It’s amazing how many people believe Tesla and Nikola are different beasts, when they execute in an almost identical manner, and have the same set of short sellers.

Except, you know, building and selling the car that brought the EV market back from the dead, building a high end brand with the Model S, then building the most popular EV in the world, which is more then holding it's own against the rest of the established automotive world.

Tesla is 17 years old, Nikola is much younger.

So... they are different beasts? Which is it?

Or, even if you want to accept that time frame, Tesla built their own cars. This is the detail of the contract Nikola signed with GM.

It's pretty obvious that there isn't anything here at this point.

The main difference is that I can drive around in a Tesla and it seems like a pretty nice car. I don’t own one but it can’t really be a hoax at this point.

You can do that on a Nikola too. You need to start in a hilly area and ensure that you are going downhill. Nikola leverages gravity to deliver a form of transportation that uses the cleanest possible energy - gravity.

And using its super advanced HTML5 machine learning and Nikola's patented "3rd Law 2.0", it takes that gravity and stores it in a regenerative fuel cell in the battery for energy. It does this by redirecting existing inertia into the forward dampeners!

So cool.

no Nikolas have been delivered to customers, so no you cannot do that.

Technically, from their SEC financial statements, they recorded $36,000 in revenue from installing solar panels at Trevor Milton's house. He couldn't let it be zero!

I thought you were joking, but holy shit it's true!

Made me curious if there are any "pre-revenue" startups (let's say revenue < .5% of expenses) that IPOed and didn't eventually collapse. After all, it is a particularly ballsy move to IPO without any actual revenue, never mind profits.

Please use imagination till delivery.

Tesla has several different cars I can buy and drive right now. Nikola as far as I can tell has absolutely nothing I can buy and drive right now. One of these things is most definitely not like the other.

Tesla actually has working products in production with waitlists to buy them, I'd say they are very different...

Like any interview, all it takes is a little dip into technical details to separate a Nikola from a Tesla. One focused on the physics and another on the facade. The leadship also sets the template for who works there. An LDS member with no serious technical background will attract a house of hacks, not hackers.

Different kinds of fraud. Elon lies because his lies sell cars (I.e. FSD perpetually 1 quarter away). The purchasers are the aggrieved.

The effect his lies have on the stock market is secondary.

Yet one has sold a million vehicles

If you have spent more then 5min to research that topic and you actually believe that I'm sorry for you.

Nikola is following the classic Tesla playbook (remember the Cybertruck’s shattered windows, the infamous FSD video, or Elon’s settlement with the SEC?) but doesn’t have enough True Believers infesting the Internet.


I don't think that's quite the same thing. The shattered window was obviously a genuine mistake, otherwise why volunteer to throw a brick at it live on-stage?

A fairly substantial portion of your comment history, and 2/3 submissions appear to be finding some way to shit on Tesla, SpaceX, or Musk.

You also stated at one point, "This is based on my own data, owning multiple Teslas over four years."

So... why? Why do you do this?

I wonder the same thing. I first noticed this back when the iPhone came out. At the time, there were frequent posts from guys like this one complaining about Apple/Jobs fanboys, and the language they used was very similar to what you see here. "It's all fraud, Jobs is a fraud, fanboys are zealots," etc., etc.

I don't get these people. I'm not sure if they are paid shills, or true believers. I suspect there's a bit of both to be found. But I will say this: in my estimation the haters outnumber the fanboys by at least a factor of 100.

I still think apple fanboys are zealots. I was more vocal about it then, as were many heavily invested in FoSS. It's the same vocal dissent that lead to Microsoft investing in Linux on Windows and open source in general.

I don't think paid troll farms were really a thing in 2006. They are now, and you see less apple dissent. So I'm not inclined to think these things are related.

This is the opposite of the Tesla playbook. Tesla tried to demo, publicly, the window strength of the Cybertruck (it failed).

The analogy would have worked if Trevor had actually tried to drive the "fully functional" vehicle that wasn't a "pusher" around. Even if it had failed, then we'd have seen the truth there too.

SpaceX and Tesla have working products on the market

Nikola has a truck that goes downhill

And should be pronounced as Ni-kool-aid, it seems...

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