Nikola went public through a reverse merger with a blank-check company in June 2020, in a deal that made Milton into an overnight billionaire. At one point, the company’s shares ballooned to almost $80 apiece, giving it a market capitalization greater than Ford Motor Co. despite not generating any meaningful revenue.
Days after the startup’s shares debuted, Bloomberg News reported that Milton had exaggerated the capability of the company’s debut truck, the Nikola One. That story got the attention of an activist investor at Hindenburg Research, which published a detailed report in September accusing Milton and Nikola of deceiving investors.
Nikola initially denied the claims by Hindenburg, which was betting against its shares. But Milton resigned later that month, and in February the company said an internal review of claims about its technology concluded the startup and its founder made several inaccurate statements. Hindenburg congratulated investigators for holding Milton accountable for his statements in a tweet posted after he was charged.
The fallout from the accusations has forced Nikola to curtail its ambitions. A deal with General Motors Co. to build trucks collapsed, and an electric-powered garbage truck program with Republic Services Inc. was cancelled.
Nikola’s market capitalization has plunged from almost $29 billion in June last year to about $5 billion currently. Milton is the company’s largest shareholder with stake of around 20% of the company directly, according to data compiled by Bloomberg. He also owns additional shares through a joint entity called T&M Residual with Mark Russell, Nikola’s current Chief Executive Officer.
Social Media Usage
The SEC says Milton was “intensely focused” on the company’s stock price, calling and texting senior executives to “do something” on days when the shares were falling. He also “tracked the daily number of new Robinhood users who held Nikola stock,” according to the complaint.
Gurbir Grewal, the SEC’s head of enforcement, said Thursday the case was about the obligations of corporate officers to provide complete and accurate information about their companies’ operations. “Corporate officers cannot say whatever they want on social media in violation of federal securities laws,” he said.
Around the time of the merger, Milton tweeted about up a battery-powered pickup known as the Badger — a truck the company had said in regulatory filings may not make it to production because it lacked a manufacturing partner. Milton also used his social media presence and appearances in interviews to announce new initiatives and changes, before informing the company, the SEC alleges.