(AP and WKBN) – The founder and one-time executive chairman of Nikola Corp. Trevor Milton is set to face charges Thursday for making false and misleading statements to investors in the electric and hydrogen-powered truck startup.
Milton resigned from Nikola in September amid allegations of fraud. At the time Milton said he would defend himself against accusations that the company made false claims about its vehicles, allegations Nikola rejects.
In a sealed indictment, the U.S. District Court for the Southern District of New York stated that Milton faces two counts of securities fraud and one count of wire fraud.
Shares of Nikola Corp. tumbled 7% before the opening bell Thursday.
The story sounds familiar. Lordstown Motors, the hope for a “Voltage Valley” future is also embroiled in its own SEC troubles and investor doubt.
Electric vehicle startups are facing many challenges as investors see visions of Elon Musk’s Tesla Corporation as a template for success. But Tesla didn’t have the competition of the big three automakers who, at the time of Tesla’s emergence as a dominant player in the EV field, were still working out whether the product line would be profitable. Now they know that it is and are shifting gears in a big way to bring EV technology to the masses.
The fall of Trevor Milton and the resignation of top officials at Lordstown Motors earlier this year signal a trend in EV startups struggling to make a footprint in an industry they helped develop.
Once coined as “startup darlings” by outlets such as The Wall Street Journal, Hinderburg Research narrowed in on both Lordstown Motors and Nikola Corp. with accusations they oversold their ability to come through on promises they made to get investors on board.
Is this the end for Nikola and Lordstown Motors? Experts say definitely not. Nikola’s market value is at $5.2 billion according to investors.com and stocks are recovering.
For Lordstown Motors, changes at the helm have restored some confidence in the company. While its stock tanked, too, with each new obstacle, Lordstown Motors just received a $400 million cash infusion from investor group Yorkville Advisors. It remains to be seen if this teamwork will allow Lordstown Motors to hit its goal of starting production before the end of the year.
At the time of this report Lordstown Motors, trading under the name RIDE, was at $6.40, down 2.52%. It was trading at $31.40 in October 2020.