Nikola Founder and Executive Chairman announced he’s stepping down from the company. Yahoo Finance’s Brian Sozzi, Alexis Christoforous, and Rick Newman discuss.
ALEXIS CHRISTOFOROUS Things keep looking downhill for Nikola. It was announced early this morning that the electric truck maker's founder, Trevor Milton, is stepping down as executive chairman, just a little over a week after short-seller Hindenburg research released a report saying Nikola misled investors.
Yahoo Finance's Rick Newman is here with the details. So Rick, stock is down about 21% right now. Does Trevor Milton's stepping down from Nikola-- can you liken that at all to us if Elon Musk were to step down from a Tesla?
RICK NEWMAN: I think that's exactly what the market is trying to figure out with what's going on here. So the stock was actually down a little bit more at the open. It started out down about 27%. And it's got a bit of a snapback from that. So now down about 21%.
General Motors stock also down, but not nearly as much. Of course Nikola had that deal with GM, which kind of put them on the map in the first place. So the market is trying to figure out-- is just company for real or not? And I don't think we know the answer today.
BRIAN SOZZI: Rick, isn't the other component to this sell off that Milton owns 20% of the stock, valued before the sell off at about $3.3 billion, that now that he's no longer involved with the company, he dumps his stake and waves goodbye.
RICK NEWMAN: Right. So if Elon Musk were to do that at Tesla, it would sort of signal the end of the company as we know it. But look at other companies like this. I mean, Uber's CEO resigned after a lot of controversy at that company. And obviously Uber soldiers on. So Uber was independent of its founder, it turned out.
It's very early in Nikola's story here. I mean, they haven't even produced a vehicle yet. And that's the real question of this company. Is the technology real or is it vaporware?
One thing I would point out. I guess two things, actually. You know, General Motors-- they aren't dummies. They know what they're doing. They have a lot of expertise at the top of that company.
And you would think they would have vetted Nikola before they made this deal to buy a stake in the company and to provide technology once they actually start building trucks, if they ever do start building trucks. So you've got to have a little bit of faith at least, I think, in GM.
And the other thing is that the other person involved in Nikola is a guy named Steve Girsky. He was vise chairman at General Motors. And he started this blank-check company called VectoIQ, which became Nikola when the firm went public in June. Steve Girsky also ought to know what he's doing.
So if Turner Milton snowed all of these longtime industry professionals, it was quite a magic act. I think there's reason to think there might still be some value tucked away in this company.
ALEXIS CHRISTOFOROUS And at least one Wall Street firm coming to the defense of Nikola today. This morning, Rick, we've got Cowen saying weakness in the stock is a buying opportunity. Not the last we've heard of this saga.
RICK NEWMAN: There you go.
ALEXIS CHRISTOFOROUS We'll be following it. So will you. Thanks, Rick.
RICK NEWMAN: Bye guys.