World News – United States – Nikola shares slide after Republic Services’ electric garbage truck development contract ends

Nikola shares were down as much as 12% in premarket trading Wednesday after it was announced it ended its partnership with Republic Services to co-develop electricity from garbage trucks.

Nikola said the decision was made after both companies « determined that combining the various emerging technologies and design concepts would result in longer than expected development time and unexpected costs. « 

« This was the right decision for both companies, given the resources and investment required, » Nikola CEO Mark Russell said in a statement. « We support and respect Republic Services’ commitment to providing environmentally conscious and sustainable solutions for their customers. « 

When the deal for thousands of trucks was originally announced in August, Nikola stock rose 22% to $ 44. 81 one share. The shares are currently trading at around a third of that price. Shares opened 7. 6% lower Wednesday at $ 15. 55.

« In short, this is a ‘belly blow’ for investors who were hoping that this monster deal could be a potential paradigm shift for Nikola and reference customers in the future, » Wedbush analyst Dan Ives said in a press release on Wednesday to the investors.

The end of the deal marks the latest blow to Nikola, which was considered one of the hottest stocks on Wall Street earlier this year. The company’s fall was as rapid as its rise.

Following its IPO in June through a reverse merger with a special purpose vehicle (SPAC), shares soared as investors bet the company could be the next Tesla. The push was led by then chairman and founder Trevor Milton, who was open, charismatic, and very involved on social media. similar to Elon Musk, CEO of Tesla.

The hype surrounding the pre-revenue company drove shares to nearly $ 100 in June and briefly pushed the company’s market cap lower than Ford Motor. The stock has always been volatile, but its biggest decline began in September.

Milton resigned after the Justice Department and Securities and Exchange Commission began investigations into fraud allegations of short seller Hindenburg in September.

Hindenburg accused Milton of making false statements about Nikola’s technology to grow the company and partner with auto companies. The report, titled Nikola: How to Partner an Ocean of Lies with America’s Largest Automaker, was released two days after a deal with General Motors was announced. It characterized Nikola as « an intricate scam based on dozens of lies » by Milton.

At the time, Milton and the company contested many of the claims, but admitted it was one of Hindenburg’s greatest claims. that it staged a video showing a truck that appeared to be functional but not working, as well as claiming that the truck was fully functional.

GM last month withdrew its original $ 2 billion share deal with Nikola, which would have given the automaker an 11% stake in the company. Consent to a non-binding Memorandum of Understanding for the delivery of fuel cell technology to Nikola.

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Nikola Corporation, Republic Services, electric vehicle, warehouse