Nikola Motor Company (NKLA) is the worst company of the year, according to Yahoo Finance users, who chose the company in a poll. Nikola received almost five times more votes than the second-place company, with a plurality of 15% of the 1,582 responses.
It’s been quite the year for the electric truck company, which took the other available half of electric innovator Nikola Tesla’s name. And not in a good way.
Positioning itself as an electro/hydrogen long-haul semi truck version of Tesla, which has been booming this year with shares up over 600%, Nikola went public in June through a special purpose acquisition company (SPAC) with a value of $3.3 billion. The company also has plans to have a network of charging stations to make a long-haul network work.
Here’s a recap of Nikola in 2020:
The company’s valuation had soared to $80 a share on the hype of a futuristic-looking battery-powered pickup truck positioned to consumers, not for the trucking industry as most of the company’s focus seemed to be.
In September, Nikola announced an alliance with GM to use the GM’s fuel cells and build pickup trucks, exciting investors and sending shares up over 48%. Nikola’s pickup truck, the Badger, was going to be delivered by GM by the end of 2022 and Nikola was also slated to buy GM technology to power its long-haulers. GM would own 11% of the company under the deal.
The deal gave the company a lot of credibility, with GM (GM) as a partner; but on Sept. 10, short seller Hindenburg Research published a report that cast a great shadow over the company, alleging Nikola made false statements about its technology and capabilities. Among the allegations was a claim that one of its trucks in a video was not driving but in fact rolling down an incline. Hindenburg also alleged the company’s founder, Trevor Milton, of nepotism after appointing his brother Travis, who Hindenburg said did not have enough experience.
“Nikola has been vetted by some of the world’s most credible companies and investors”, the company said in a statement at the time. “[Nikola] will not waver based on a report filled with misleading information attempting to manipulate our stock.”
Though the company denied the reports, it confirmed that the truck in a video was not driving, saying it never said the truck was powering itself. Still, founder Trevor Milton stepped down as CEO, sinking shares around 30%.
In late November, GM announced a new agreement, scaling back the partnership to just the fuel cell side, scrapping the pickup and the automaker’s stake in Nikola. Shares plummeted almost 25% that afternoon after having already been down on rumors.
On Dec. 1, as the stock lockup period expired, the price fell to around $18 as investors bailed.
The young company is in its growing phase and isn’t selling trucks or generating any revenue — or profit — thus far, reporting a loss of $117 million in Q3.
Yahoo Finance users are disappointed, angry, and poorer
Many respondents were furious with the company for losing their money.
In 220 angry and disappointed responses, the word “fraud” appeared 74 times and “scam” 36 times.
Nikola has strongly denied allegations of fraud. According to Bloomberg, the SEC is investigating Hindenburg’s claims about Nikola, and the Financial Times reported that the Justice Department has also launched a probe and then later subpoenaed Milton, which the company acknowledged in November.
Just 20% of Yahoo Finance users who chose Nikola as the worst company of the year said the company could redeem itself.
The biggest problem was the simple fact that the truck maker has not delivered on its promise, readers said. A close follow-up was the lack of transparency the company had shown.
One reader, who said the company could turn things around, urged it to “commit to the difficult work of developing actual technologies and products, and communicate progress to stakeholders and the public on a transparent and accurate basis.”
Another reader who also had some hope said Nikola needs to “ask for help.” This was a common theme, as many were disappointed the partnership with GM didn’t result in a symbiotic relationship in which the proven manufacturer and futuristic upstart worked together to innovate.
This call for partnership with a non-startup along with the exhortation to “set expectations and deliver” was popular as many seemed to think that the company had bit off more than it could chew, getting swept up in the hype.
Nikola declined to comment to Yahoo Finance, but pointed readers towards a release about the company’s strategy that was published at the end of September. In it, the company responds to critics by highlighting its path forward: towards its milestones of having prototypes completed and testing, commercial hydrogen stations, and production for its trucks.