Another car company is facing delisting! The market value has evaporated by 98%, and the new cars built in the United States are also chicken feathers
The aftershocks of fraud remain
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Author | Truman
Editor|In Continent
Companies that have threatened to surpass Tesla are facing delisting.
Nikola, a new American automaker, received a delisting warning letter because its share price did not meet the minimum share price requirement. That is, the stock price has not exceeded $1 in the past 30 days, which is not in line with NASDAQ regulations.
In fact, Nikola's stock price has fallen below the bottom line of $1 since April 12 this year. At press time, the stock fell another 8% to $0.574, with a total market value of just $447.3 million, which is more than 98% off from its peak.
Source: Yahoo Finance
You know, when Nikolai went public on the backdoor, the market value once exceeded $30 billion, and it also exceeded Ford and General Motors at that time.
Nikola's founder, Trevor Milton, has also publicly stated that few people in the world have surpassed Musk, and he did. Apparently this phrase has no shelf life and is quickly slapped in the face.
And it is not only Nikolai who has recently faced delisting, not long ago, Lordstown Motors, which is also a new American car company, also said that it received a delisting notice.
In addition, the stock prices of new American car companies such as Arrival and Canoo have fallen very badly, except for Tesla, other new car companies in the United States are in dire straits.
01
Only 31 units were delivered in 3 months
According to Nasdaq's requirements, listed companies will receive a delisting warning if their share price falls below $1 for 30 consecutive days.
Nikolai was not willing to delist, but won a "grace period". Nikolai said in a statement that the Nasdaq notice will not affect their normal trading at this time, and the company has applied for 180 days until November 20 to re-meet the minimum share price requirement.
Source: Nikola
During this period, its shares must be above $1 for at least 10 consecutive trading days to qualify.
Of course, Nicola also has Plan B.
Its CEO Michael Lohscheller said a reverse stock split could be performed if its shares did not meet Nasdaq's minimum bid requirements for a certain period of time.
A reverse stock split is when a company reduces the number of shares it has issued and the proportion of shares held by shareholders remains the same, which increases the share price while the overall market capitalization does not change, but it also means that there will be fewer shares in Nikolai's float.
"We are confident that we will be able to re-comply with Nasdaq regulations and will work to ensure that Nikola's common stock is not delisted." Answering shareholder questions on a webcast, Michael Lohscheller said, "We need to make this tough decision. ”
In addition to the long-term sluggish stock price, Nikolai's financial situation is not optimistic.
First-quarter earnings showed that Nikolai's total revenue was $11.12 million, less than analysts' expectations of $12.5 million.
Net loss continued to widen to $170 million, an increase of approximately 10% from $153 million in the first quarter of 2022, and cash burn increased from $200 million to $240 million.
Source: Nikola
As the losses widened, production plans for trucks, its main business, were suspended. Nicola said it will revamp the production line at the Arizona plant to achieve the ability to produce both hydrogen fuel cell trucks and pure electric trucks on the same line.
Production is expected to resume in July, when the first hydrogen fuel cell trucks will be manufactured for sale.
Nikolai's pure electric trucks can only be produced to order, it is reported that in the first quarter of this year, Nikolai produced a total of 63 pure electric trucks, but only delivered 31 to dealers. In May, Nikolai sold only 14 all-electric trucks.
Nikolai's suspension of pure electric truck production also gave an explanation: hydrogen fuel cell trucks are the focus, and there are more orders.
Source: Nikola
Nikola also highlighted recent orders for fuel cell trucks: In early May, American transportation company AJR Trucking alone ordered as many as 50 vehicles. The first quarter results report also showed that Nikolai received orders for 140 hydrogen fuel cell trucks from 12 customers.
Nikolai hopes to reassess the cost structure by adjusting the business focus to reduce expenses and cash consumption.
02
Outrageous car-making drama
In 2014, under the leadership of Trevor Milton, Nikola, a new force positioning hydrogen energy heavy trucks, was established, and in 2016, Nikola, which was established for 2 years, launched the first hydrogen energy truck Nikola I.
In June of that year, Nikolai said that a month after the start of pre-orders for Nikolai I, a total of 7,000 trucks were received.
Source: Nikola
With its novel positioning, Nikolai quickly attracted the attention of the capital market, and in 2020, Nikolai completed the merger with VectoIQ Acquisition Corp, a special purpose M&A company, and landed on NASDAQ, becoming the world's first hydrogen heavy truck stock.
It should be noted that when Nikola went public at a valuation of $3.3 billion, not a single car had been sold.
On September 8, 2020, Nikola entered into a partnership with GM, which acquired $2 billion of common stock issued by Nikola and owned 11% of it. In addition, GM announced that it will produce the Badger hydrogen fuel cell electric pickup truck for Nikola by 2022.
But just two days after reaching a cooperation with GM, the well-known short-selling agency Hindenburg Research Center released a short report against Nikola, saying that Nikolai from cars to hydrogen energy technology is all fake.
Source: Hindenburg research
One of the things mentioned in the short report completely changed the direction of Nikolai.
The short report said that a video Nikolai released in 2018 showing Nikolai One driving between roads as a hydrogen fuel cell truck - was fake.
The truth is that Nikolai I is not running on hydrogen as a driving force.
Instead, Nikolai towed the truck onto a gentle slope beforehand before letting the vehicle slide off on its own, while deliberately tilting the camera at the angle to make it appear to be moving on a smooth road.
Survey screenshot of the short report Source: Hindenburg research
The short report also pointed out that Nikolai has never developed hydrogen fuel technology, and the key components such as hydrogen fuel cells and motors advertised do not exist.
"Nikolai obtained a partnership with GM by deceiving his partners by misleading his partners by falsely claiming to have a large number of patented technologies."
As soon as this short report came out, it caused an uproar, and GM then interrupted the transaction with Nikolai, and Nikola's stock price also plunged, shrinking by nearly half from the peak, and then began to "fall endlessly".
Source: Yahoo Finance
And interestingly, Nikolai generously admitted to falsification, and founder Milton also issued a statement saying that "it just slipped down on its own." ”
Ultimately, due to the fraud, founder and CEO Trevor Milton resigned in September 2020, taking $3.1 billion worth of shares with him.
Source: Nikola
In 2021, the U.S. federal prosecutor's office filed criminal charges against Trevor Milton, including false publicity about the company's products, defrauding consumers, manipulating securities, and supporting stock prices.
In the end, Trevor Milton was convicted of three counts of fraud and up to 20 years in prison, and Nicola also paid a $125 million civil penalty to settle charges of misleading investors.
After Trevor Milton left Nikola, Steve Gilsky, a member of the company's board of directors and former vice chairman of General Motors, became Nikola's chairman, and it was he who pulled the line between Nikola and GM.
Steve Gilsky Source: Nikola
The CEO role was taken over by Mark Russell, who joined Nikola in '19, and last August Nikolai issued a statement saying that Mark Russell retired on January 1, 2023, and was replaced by current Nikolai President Michael Lohscheller.
Michael Lohscheller joined Nicola as President in February 2022 and was promoted to CEO just six months later. Michael Lohscheller served as Opel's CEO before joining Nikola.
Michael Lohscheller Source: Nikola
Nikolai said that Michael played an important role in promoting the mass production of the company's products and realizing the development of fuel cell trucks.
03
Crazy self-help and exit the European market
After a series of farces such as a brilliant listing, propaganda fraud, a plummeting stock price, and the departure of the founder, Nikolai still insisted on operating, and really built a truck.
At the end of 2021, Nikola launched the production car Nikola Tre, and deliveries began in April last year, but it is purely electric.
However, just after a few deliveries, a recall was initiated due to improper installation of seat belt shoulder anchors, which may reduce the protection in the event of a crash. Last September, Nikolai recalled all Nikola Tre electric trucks produced at the time, for a total of 93 vehicles.
At present, Nikolai's official website shows that the company has two heavy trucks on sale, one is a Tre electric truck for short distances, with a range of 330 miles (about 531 kilometers) and a charging time of 90 minutes.
Source: Nikola
The other is the Tre FCEV, powered by hydrogen fuel cells for long-distance transportation, with a range of 500 miles (about 804 kilometers) and a refueling time of 20 minutes.
Source: Nikola
Nikolai, previously accused of not having hydrogen energy technology, also brought an integrated hydrogen solution.
Launched in January this year, HYLA plans to produce hydrogen in several regions in the United States and Canada, mainly responsible for producing, distributing and distributing hydrogen to provide fuel for Nikola.
Source: Nikola
It looks like Nikola is gradually getting on track, but investors don't seem to want to trust the new car company anymore.
Michael Lohscheller, Nikola's current CEO, said that next they will focus on the North American market, hydrogen fuel cell trucks, and the construction of HYLA hydrogen refueling stations to "have the right product at the right time."
It said it was "on the right path" by reinvigorating the management and commercial teams, improving sales strategies, and bringing in new distributors and energy partners. ”
At the beginning of May, Nikola announced the sale of its entire stake in the European joint venture with IVECO to focus on the development of the North American market, which meant that Nikola withdrew from the European market.
Source: Nikola
Nikolai sees both manufacturing and energy as capital-intensive businesses, a move to better focus on "where there is a competitive advantage and a first-mover advantage." ”
04
"Odd Man" Trevor Milton
Finally, let's talk about the founder of Nikolai, Trevor Milton, a strange man over 40 years old and a serial entrepreneur.
Trevor Milton himself openly stated that he did not finish high school and had a varied experience before founding Nikolai.
He founded the ADT security franchise and the car classifieds website uPillar.com, but neither of these ventures was successful, and the site never became profitable.
In 2012, Trevor Milton founded an e-commerce company, and in a shareholder letter, he drew pies to investors, saying that within two years, his company would become eBay's biggest competitor, which was almost two decades old and was the world's first online auction and shopping site.
It was the same when he founded Nikola, when Musk named the company after the Tesla in the inventor Nikola Tesla, and Milton named his truck company Nikola, and the meaning of rigidity is self-evident.
Source: Nikola
So how did such a person who did not graduate from high school and ran trains with his mouth persuaded investors to invest money in Nikolai and finally send it to the public?
As a serial entrepreneur, Trevor Milton has excellent eloquence and sales skills, and is very good at motivating employees with the company's vision to attract investors.
Moreover, Milton comes from a Mormon family, and before starting his business, Milton also worked as a missionary in Brazil for 2 years. Some former employees believed that missionary education had honed Milton's eloquence and sales skills, and that for him, there was nothing he could not sell.
For example, designer Kathy Niederhauser, who worked at Milton's startup uPillar.com, said that Milton is very energetic (much like Musk), and a very good salesman, good at understanding people's ideas, "he knows what to say to convince you to join the team."
Source: Nikola
This is why Nikola can attract old giants such as GM and Bosch, and with the blessing of giants, it can also attract more investment institutions.
It can be said that the beginning of the game was all about Milton's mouth, and when Nikolai was exposed to problems, he also gave up the equity of the company worth $166 million and decisively took $3.1 billion and left.
Some people call Milton the American version of Jia Yueting, but now that the first step of Boss Jia's turnaround has been completed, the FF91, which has lasted for 9 years, has finally been mass-produced, and can Nikolai still complete the turnover?
Suspend.