Final hours! Save up to 55% OFF InvestingProCLAIM SALE

Nikola CEO confident of closing deal with energy partner, shares up almost 21%

Published 09/30/2020, 11:26 AM
Updated 09/30/2020, 02:10 PM
© Reuters. U.S. Nikola's logo is pictured at an event held to present CNH's new full-electric and Hydrogen fuel-cell battery trucks in partnership with U.S. Nikola event in Turin
GM
-
BP
-
NKLA
-

By Ben Klayman

DETROIT (Reuters) - Nikola Corp (O:NKLA) Chief Executive Mark Russell said Wednesday he is confident the electric and hydrogen fuel cell vehicle startup will close a deal with an energy partner, and he defended the company's technology and strategy against a short-seller's fraud allegations, sending shares up almost 21% at one point.

Russell told Reuters he is confident Nikola will still announce by year-end a collaboration to build hydrogen-refueling stations. There have been reports this week that Nikola's talks with energy firms, including BP Plc (L:BP), had stalled.

"We've talked to all of those folks and those discussions are continuing," he said in an interview. "We're confident that we're still going to hit the milestones laid out there of announcing a partner by the end of the year and getting stations going starting next year."

Short-seller Hindenburg Research released a scathing report on Sept. 10 that called Nikola a "fraud" and said Nikola founder and former Executive Chairman Trevor Milton had made false claims about Nikola's proprietary technology.

Milton resigned and left the company on Sept. 21 and was replaced by Steve Girsky, whose firm took Nikola public earlier this year through a reverse merger.

Nikola has said it has discussed Hindenburg Research's charges with the Securities and Exchange Commission and will "fully cooperate" with the agency's inquiry. Russell and Girsky on Wednesday declined to comment on probes by securities regulators or the Department of Justice. Hindenburg officials declined to comment.

Nikola's shares have lost more than half their value since announcing on Sept. 8 a prospective alliance with General Motors Co (N:GM) to produce an electric pickup and fuel cell commercial trucks.

On Wednesday, Nikola stepped up its efforts to regain investor support with a lengthy statement defending its business model and technology. It reaffirmed its timetable for launching vehicles and announcing partnerships.

Nikola said it still expects to break ground on its first commercial hydrogen station in the second quarter of 2021.

Girsky, who joined Russell in the interview, said Nikola will be as much a service provider, generating revenue from refueling and other after-sale businesses, as a manufacturer of vehicles.

"Downstream revenue is more profitable and less cyclical. To be able to capture that revenue is pretty powerful to us," Girsky said.

Russell said talks continue to finalize an alliance with GM but declined further comment. Nikola had previously said it expected to finalize terms prior to Sept. 30.

GM also affirmed Wednesday that the talks with Nikola continue.

Russell said Nikola's success did not depend on partners, but they "increase the odds of succeeding."

JP Morgan analyst Paul Coster said in a research note Nikola is trying to "re-establish control of the narrative around the company." He said closing the GM deal is the most important near-term catalyst and Nikola's strategy remains compelling although execution risks remain.

© Reuters. U.S. Nikola's logo is pictured at an event held to present CNH's new full-electric and Hydrogen fuel-cell battery trucks in partnership with U.S. Nikola event in Turin

Nikola shares rose as high as $21.59 and were still up 17.5% at $21.02 in afternoon trading.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.