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Nikola rebuts short-seller fraud claims

Nikola released a new statement on Monday, rebutting more claims about the short-selling fraud claims from Hindenburg Research. Yahoo Finance’s Ines Ferre joins The Final Round to discuss the details and what this means for the company and for Tesla.

Video Transcript

SEANA SMITH: Welcome back to "The Final Round." Nikola shares rebounding today, up just around 11%, clawing back some of the losses from last week. Now, shares were down 24% Thursday and Friday on claims of fraud by a short-seller firm. It was Hindenburg Research. Now, the accusation coming just a couple of days after GM said that it was taking an 11% stake in the company.

Ines Ferre, you have been following this story, and Nikola today refuting those claims. I know they released a six-page document. But judging from the stock's reaction, it looks like investors at least were satisfied with what they heard.

INES FERRE: Yes, because some investors had been wanting a more detailed rebuttal from that Friday statement which Nikola had put out basically saying that that Hindenburg report was a hit job, but it wasn't enough detail. So this really delved into some of the big accusations. And let me show you one of the quotes from that statement.

It said, "The report from Hindenburg, an activist short-seller financially motivated to manipulate the market and profit from a manufactured decline in Nikola's stock price, contains a number of false and misleading statements regarding the company's operations and multi-year groundbreaking R&D efforts." Now, some of the big claims include this one. The short-seller had alleged that the 2016 Nikola One truck was not a real truck and was, in fact, a pusher.

Now, Nikola says that the gearbox was functional, the batteries were functional, the inverters were functional, the power steering and suspension were functional. It did say, though, that as Nikola pivoted to the next generation of trucks, it decided not to invest additional resources into completing the process to make the Nikola One drive on-- on its own propulsion. And it also addressed the video that the short-seller had said was filmed of the truck, the Nikola One, rolling down a big hill.

So Nikola said Nikola never stated its truck was driving under its own propulsion in the video, although the truck was designed to do just that. Nikola said that this was a third-party video, it was done several years ago, and that the video described the truck as "in motion," that it never described it as under its own propulsion or powertrain-driven, and that investors at the time when Nikola was a private company knew exactly the capabilities of this truck.

It also went on to talk about some other claims, including something which Nikola said was mischaracterized by the short-seller, which were some comments from a Bosch employee. Bosch is one of the partners of Nikola, and Bosch had stated that specific instances in the report quoting a Bosch employee were taken out of context. But certainly, investors were more pleased with this rebuttal, which was a bit more detailed than the statement that came out last Friday, Seana.

SEANA SMITH: Yeah, Ines, it certainly was a little bit more detailed. But it's also interesting when you think about GM's role in this because Mary Barra was asked about this, the CEO of GM, today, and she said that GM did their due-- due diligence. And I think that was a big question on investors' minds over the last couple of days and just whether or not that was the case.

I think a lot of people thought that it was the case, but to hear her reaffirm that I think is helping. But I'm just curious what you think just in terms of how much does this help the argument that Nikola is legitimate, that it kind of puts to rest some of those rumors and some of those thoughts out there?

INES FERRE: You know, every time I write a piece, I hear from some of the people on Twitter, and some of them being investors of Nikola. And I will say that the investors who are invested in Nikola really want to believe in the story. And as far as the stock and the company itself, you know, Dan Ives came out and said this is still a-- a stock that is a "prove me story" type of stock.

So I think that part of what you're seeing today was certainly a positive reaction to the statement that Nikola came out with, also to the statements that you just referred to of Mary Barra. But-- but there's still some-- something to be seen here as far as long term. The EV space is a very, very difficult space, as we know. So I think that investors are still in a wait and see mode.

This doesn't bode that well. Citron Research also came out with a tweet last Friday basically helping-- basically supporting the Hindenburg research report, saying congratulations basically to Hindenburg. And that Citron would put up an-- half of any loss in costs, because Nikola has basically said that they have a law firm to see if they can-- about legal action that they may take or legal recourse, and that they're going to the SEC with the short-seller report. So it remains to-- a wait-and-see kind of story.

SEANA SMITH: All right, Ines, thank you.