HomeInvesting NewsNikola Stock Drops as Former CEO Faces Trial Over Deception

Nikola Stock Drops as Former CEO Faces Trial Over Deception

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Nikola’s stock dropped on reports that Mr. Milton made false claims about Nikola’s technology.

500 of Nikola’s battery-powered heavy trucks could be delivered this year, according to the company.

Nikola Corporation (NASDAQ:NKLA)

On Monday, the jury selection process will begin in Manhattan for the US fraud trial of former Nikola Corporation (NASDAQ:NKLA) CEO, Trevor Milton. Beginning in November 2019, Milton is being investigated for allegedly misleading and misrepresenting investors about the technology behind the maker of hydrogen-powered trucks. He is also charged with defrauding the Utah ranch seller who, believing Milton’s assertions, agreed to include Nikola stock options as part of the sale price.

Milton has entered a not-guilty plea to two counts of wire fraud and two counts of securities fraud. His case will likely be that he didn’t intend to cheat investors and that other top Nikola executives approved of Milton’s comments about Nikola. The expected trial duration is four to five weeks.

In contrast, NKLA settled an SEC fraud inquiry last year by paying a $125 million civil penalty without pleading guilty.

Auto Company Updates

Star Chinese EV manufacturers NIO Inc. (NIO), Li Auto (LI), and XPeng Inc. (XPEV) released their August delivery updates last week. NIO saw an increase in deliveries compared to July levels, although XPeng and Li Auto saw a decline in sales from one month to the next. The deliveries were hampered by the slowing of the Chinese economy as well as supply chain snarls brought on by COVID-19’s reappearance and ensuing lockdowns. The hardest hit was actually LI, whose August deliveries fell more than 50% year over year in addition to falling month over month.

The electric truck manufacturer NKLA, which is based in Arizona, announced its intention to raise $400 million through a stock offering. The company is currently dealing with production bottlenecks, rising commodity prices, and logistical issues that are worsening its liquidity profile and forcing it to seek a cash infusion.

Featured Image-  Megapixl @Julioricco

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