Nikola CEO Isn’t Reassuring Investors that GM Will Keep to Their $2 Billion Deal

Electric vehicle start up company Nikola Corp. saw its shares fall as much as 17.4% in Wednesday’s trading session.

It seems Wall Street was not impressed with the company’s CEO’s lack of reassurance that General Motors would stick to their $2 billion deal.

CEO Mark Russell failed to reassure investors that the deal with GM would be still finalized or that there wouldn’t be a stock sell off next week by the company’s ex-chairman and founder Trevor Milton.

In an interview on Tuesday on CNBC’s “Mad Money with Jim Cramer,” Russell said discussions with GM about supplying fuel cell and battery technologies as well as an all-electric pickup are ongoing. He did not provide further detail.

“Both of those things are interesting to us,” he said of GM’s technologies. “We continue to talk to them about those things.” If a deal isn’t finalized by Dec. 3, either side can walkaway.

Russell also did not mention what he thinks Milton will do with the 91.6 million shares he owns after a lock up period expires on December 1st. This includes 6 million shares in “founder options” he gave to the early employees, leaving him with 85.6 million shares. There are roughly 360.9 million shares of company stock outstanding, making Milton Nikola’s largest single shareholder.

All of those shares will be eligible to sell next week.

“Can’t comment for Trevor, of course,” Russell said. “But we believe that as we execute
on our milestones and on our business plan, we’re going to reward our long-term focus shareholders. That’s our focus, is on the long-term.”

Owners of 136.5 million shares of Nikola agreed to extend their lock-up until April 31, including 39.8 million shares held by a separate company controlled by Russell but owned by Milton called T&M Residual.

Milton stepped down after the Department of Justice and Securities and Exchange Commission started investigating allegations of fraud.

Short-seller Hindenburg accused Milton of making false statements about Nikola’s technology in order to grow the company and partner with auto companies. The report entitled “Nikola: How to Parlay An Ocean of Lies Into a Partnership With the Largest Auto OEM in America,” was released two days after the company announced a deal with GM.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.