The end of Trevor Milton as chairman of electric truck manufacturer Nikola Corp. ($NKLA) has cost shareholders a lot of money. The downward pull of Nikola shares threatens to intensify, several analysts say.

For shareholders of the electric truck manufacturer Nikola, the past period was anything but stable, resulting in a sharp drop in the share’s value. In June 20202 the company went public with great ambitions in and was overloaded by positive reactions beforehand. The business model convinced a broad investor base and the concept of wanting to produce hydrogen-powered trucks was also positively noticed on Wall Street.

Unfortunately for Nikola, this was only short-lived, because the company does not generate any significant turnover, it is still uncertain when the electric car manufacturer and former competitor of Tesla will ever live up to the expectations. Uncertainty grew among shareholders about the electric trucks of the future. Until the largest US auto manufacturer, General Motors ($GM) – in terms of sales and market share – announced plans in September to acquire the production of the Badger pickup truck, signifying a strategic partnership.

Nikola boss Trevor Milton had high potential at the time given that General Motors showed interest, but nothing could be further from the truth of Nikola. Because shortly afterwards, Hindenburg Research came out with the news that massive allegations against Nikola had been made, in which allegations emerged as fraud and a complex fraud. Nikola did not respond as the market had hoped. Rather than rejecting and concretely rebutting the financial speculator’s report, it was a rather half-hearted denial, and Nikola even had to admit that the electric truck didn’t run in previous promotions, but that it was was pushed down a hill. The high-potential Nikola turned into an unprofessional mess in one fell swoop. This confession ultimately cost Trevor Milton his job.

This has led to radical changes in the operational power structure, but will not change the shareholder structure for now. Even after Trevor Milton leaves the company, he still owns a stake in Nikola shares worth billions. At least that’s what Forbes claims, which currently estimates the value of its shares at about $2.7 billion. He thus owns about 25 percent of the shares, making Trevor Milton the largest shareholder in the truck manufacturer.

Whether that is also news is highly doubtful and could increase the downward pull. He can offer the shares to the market without complying with any reporting obligations, since he is no longer part of the Nikola team. When a quarter of the NKLA-share suddenly hits the market, finding enough buyers is extremely challenging and the expectations are that the share will not recover from this or takes years to do so. Today, the share has again declined by around 10 percent and this does not seem to be going the other way anytime soon. We will keep a close eye on the Nikola soap.

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By Omar