Musk has a history of building and shipping successful products company after company in spite of a constant amount of people saying he would fail. (X.com, Paypal, Tesla, SpaceX, Neuralink, Boring).
Nikola is a complete fraud that collected money from know-nothing investors riding on EVs and Tesla's name. They haven't shipped anything and probably never will. Bizarrely positively portrayed in the press alongside negative Tesla stories - I imagine because it's good for clicks?
I find it hard to believe the SPAC that brought them public wasn't solely for the purpose of allowing them to steal as much as they could from the public before they shut down. No idea how well they played it - I guess we'll see if anyone ends up in prison.
At least he got to con his way into a fancy ranch in the mean time: https://www.latimes.com/business/real-estate/story/2019-11-1...
People like this make the world worse for the rest of us (and make it harder for honest startups to raise money).
From what I've heard recently Nikola just seems like straight up lies and fraud from trying to piggy back on the success of Tesla.
Neither are good, but one is much worse in my opinion.
I always set unrealistic bars for myself. And in the end I get more from not reaching my goal than I would from reaching a lower one.
Nikola's product is the brand of being a hip, "with it" electric car company, like Tesla, but different, and they are selling it to GM. It's a simple straightforward win-win, and everything that looks like fakery is beside the point. It has solid value to GM precisely because of the inflated, arguably irrational value of Tesla.
Now, I'm not investing, but it did occur to me to look at it that way. They are not actually in the same business as Tesla or GM. They're laundering cool factor.
I actually disagree with this take but it gets close to the problem with Trevor Milton. Trevor is very unpolished. I'm skeptical of how detailed he gets with all the in's and out's with the technologies he's trying to innovate and make more efficient. What's going for him is a few things, he's partnering with many companies which means he's mitigating the company's risk. Now that Musk created the market, others want to join in and try whatever route that sticks.
Musk on the other hand, speaks in more precise words when describing a topic. Musk does sell vaporware but...eventually (behind 'schedule') Musk delivers. This lazy focus on manifesting a specific vision what what Musk is doing. He'll let the entire engineering department go, if they aren't willing to work hard at making the future a reality.
Going full circle, the energy density of hydrogen fuel cell is the future. I don't see how it's not. All you need now is for Toyota to join forces with them and you'll have an unstoppable force that will help reduce emission drastically and at a large scale. The technology is very close (1, maybe 2 iterations away) and I doubt they are far away from a breakthrough. I don't believe Milton could've focused on Hydrogen semi's prior to the success of Tesla, he doesn't have that skill but...he's making due with what he's after. He's also being wise at selling electric trucks too because the market is primed for it (read: Musk primed it).
In conclusion, there are a lot of investors deep into Nikola. If Milton gets in the way of bringing this realistic engineering challenge to market, the investors will change it up. I'm not certain of how much voting say that Milton has but...it's a good sign that he stepped back from CEO role. He's way too sloppy with his words but...he brings the hype and investors are still wanting his hype. It's messy but nothing worth doing is ever blameless.
P.S. I don't own either stock. Nor any energy/battery/car/electric stocks. I'm just interested in advancing our technology.
Based on what? Just looking at the density is not enough. You have to look at the whole system from generation to actually driving.
The hydrogen system is even in the best case, assume multiple many, many improvements in mass manufacturing and so on, only half as efficient as an electric system.
Battery technology is improving at a far faster rate then hydrogen technology, its not even remotely close. By the time your predicted ' (1, maybe 2 iterations away)' happens, batteries will have made 5 iterations.
The DoD for example is already sponsoring a massive program that companies lots of universities and national labs to work on Lithium Sulfur batteries that could double or triple the density of current Li batteries while also being quite a bit cheaper.
Silicon anode batteries are already in the early stages of commercialisation and they will make commercial aviation feasible.
And even if you insist on using chemical fuel, why would you use hydrogen? If you want to drive a truck a long distance at a time, you could just use dimethyl ether, methnol or something like that. That would solve tons of problem with storage and so on.
I really don't understand why people are so fascinated with hydrogen, while it continue to disappoint for 30 years. Even in the space industry, where fuel cell used to be used all the time there use has fallen out of favor.
Instead of advancing technology, they might have taken funding and credibility actual companies could have used.
The founder has so far answered just one real question on twitter, about what they were going to bring to the GM produced car: "100% a badger. We will use common parts for example; tires, window regulators, hvac, brakes & batteries to drive down cost, but the badger is completely a badger. The infotainment, displays, software, ota, app, cab, interior, user experience, sales, service, warranty etc is ours"
That's a long way to say they'll use their software and sales team.
That is flat false, making a automotive battery out of laptop batteries was quite a technology development. They also made their own engines and inverters from the beginning.
> The CEO of Tesla is also well known to be untrustworthy with his promises
Actually the opposite, it is well known that when he says something its very likely going to happen. As most of the things he say, no matter how crazy to turn out to actually happen.
Arguable there is no other human alive in the world today, that when he say 'We are gone do X' that more people believe could actually do it.
> having even being formally investigated by the SEC for stock price manipulation.
He wasn't investigated for stock price manipulation, he was investigated for improper communication to stock holders.
> I don't know the future, but there is a possibility that they will also develop the needed technology to make it all work.
So even after 10 years of consistently laying every year, announcing dozens of technologies that all turn out to be totally fake you still think they can do it. That seems beyond utterly blue-eye to me.
Also it was only yesterday that GM announced taking an 11% in the company for $2B. Surely GM has done their due diligence before throwing a couple of billions in? https://www.cnn.com/2020/09/08/business/nikola-gm-badger-ele...
That all said, everyone also thought Theranos was legitimate until they were exposed to be not.
Short sellers don’t really have an interest to lie though. If it doesn’t look like there is really a fire, it’s much better to close the position and hunt for a new target rather than trying to make it seem like a problem when there isn’t. Lies don’t help short sellers because they present a legal risk and a financial risk (the market steam rolling them as they are seen through).
GM + Nikola = Theranos + Walgreens
Big Co partnership !== legitimacy
I'm not sure there's any signal embedded in the knowledge that a company as incompetent as GM has done due diligence.
Started with Cruise, now Nikola, and it will continue until they’re bankrupt.
Edit: Apparently what I said is incorrect about Theranos. I have heard this but I have never made a study of the company. So it might well not be correct or only for a limited time.
I'm pretty sure I am correct about Mitons house.
https://mashable.com/article/theranos-elizabeth-holmes-detai...
While not shocking given the previous track record of Trevor's previous enterprises - the most likely outcome here is that it will get very, very ugly. He also already 'cashed out' millions of dollars to buy a 32.5 million dollar ranch - one of the largest residential properties in Utah's history. [1]
Tesla's run up and general optimism around EVs seems to have triggered a gold rush of sorts, effecting other EV pureplays' stock prices (ex. NIO) regardless of progress and actual state of the technology.
While in theory I am in strong support of new financing models to bring new technologies to market(ex. these Special Purpose Acquisition Companies - SPACs) I am very concerned that if even a portion of the alleged is true, this could poison this financing route for legitimate businesses and the sector overall. A camp in the investment industry even think Tesla is a fraud, and this would only harm the narrative and long term mission of Tesla.
It would have been great if they actually took the money, utilized it with a plan and executed on the plan to help with electrification - the premise for which I think many retail investors have become involved.
Even if there was no fraud, I was always skeptical of their plan (smelled like vaporware to me) and their adamance about hydrogen as an energy storage medium without sufficient discussion on electrolyzer technology or how those unit economics work always struck me as big red flags. Seems like Nikola's plan was to combine a bunch of off the shelf parts existing from other sources into a product, in that case - where is the technology? So much of it with just the bit of digging and what I hear about it has made me skeptical.
Probably best to stay as far away as possible and see where the chips fall. I do wish them the best though, assuming there was no fraud.
[1] https://www.latimes.com/business/real-estate/story/2019-11-1...
At this point in Tesla's history, how is it a fraud? It is manufacturing and selling cars. It is building batteries. I can see where some may think it is not living up to the hype/promise of returns, but they are actually making and selling product. Yet people are still claiming fraud?
However short selling at its core just involves the belief that a company is overvalued. In the case of extreme fraud, the "correct value" is $0. In most cases, the short seller just believes it's some amount less than the current share price (but above $0).
Tesla falls into the latter category. I'm sure some do claim fraudulent behavior, but Tesla is an interesting case because Tesla's PE is ~200 IIRC, compared to the 20 average for the automotive industry. For comparison, Amazon's PE is 120.
So if you think Tesla is ultimately a car company, or even just a "regular" tech company, it's not insane to think that it's incredibly overvalued. That doesn't mean you think it's a fraud, of course, but the subtlety obviously gets lost by many (and short sellers often make grandiose edicts that don't help their case).
They do appear to be generating income from operations these days, but the size of the operation has increased so fast that it is hard to analyze.
I'm just relaying what I have heard and read. Tesla's history is far from perfect. I think the target of issue has been their various claims and promises on 'self-driving' and their autonomous vehicle programs. Also, some possible issues surrounding the acquisition/merger of SolarCity.
And while the shorts around Tesla aren't making much noise right now given all the momentum, it wasn't all that long ago that there were some loud short sellers alleging about various accounting frauds. Some quick 'internet research' here will dig up various allegations and statements from the 'haters'.
More common at issue is that many traditional auto analysts' existing equity valuation models for auto companies 'break' when you plug in the numbers for Tesla - making it impossible to come to a 'reasonable' valuation they are comfortable buying at (as these are people investing other people's money need to be able to point to something that justifies the purchase if it goes south).
SPACs have been around for a long time, and they've always had a bad reputation, often used for various forms of fraud and penny stock scams. Going live via a SPAC is opaque and expensive; you'd never choose it unless the normal IPO path seemed too risky for some reason, probably because you might not be able to survive the transparency the process requires.
If Nikola is just a complete fraud, that wouldn't taint SPACs so much as it would confirm their existing reputation.
This gem right here:
> "The entire infotainment system is a HTML 5 super computer," Milton said. "That's the standard language for computer programmers around the world, so using it let's us build our own chips. And HTML 5 is very secure. Every component is linked on the data network, all speaking the same language. It's not a bunch of separate systems that somehow still manage to communicate."
This guy does not know what HTML is. What he has described is not what HTML would be used for.
And I'm supposed to believe he's some sort of mastermind behind some new age hydrogen/electric truck?
But Alibaba is real. It's a real company doing real things and delivering real value. It's a giant success.
Now I'm not saying Nikola will be (maybe those shorts for 2022 are pretty cheap) but people speak like complete idiots and still run successful companies that they start.
¹ https://www.youtube.com/watch?v=f3lUEnMaiAU
Here's a highlight: https://youtu.be/f3lUEnMaiAU?t=789
It became clear they (+ANT financial) exist only because the CCP allows them to exist with heavy funding.
https://www.marketwatch.com/story/can-we-trust-alibabas-numb...
He comes across as a complete idiot.
Maybe you don't need to be that smart to run a company like Alibaba, but I find that hard to believe - I suspect government protection and party favoritism plays a part.
When you are the head of a revolutionary startup that's competing technologically with existing companies, you can't afford to be one.
"More impressive is that Nikola’s revenue for the second quarter was very small ('immaterial,' Nikola actually calls it), just $36,000. Most impressive, though, is how they earned that revenue:
'During the three months ended June 30, 2020 and 2019 the Company recorded solar revenues of $0.03 million and $0.04 million, respectively, for the provision of solar installation services to the Executive Chairman, which are billed on time and materials basis. During the six months ended June 30, 2020 and 2019 the Company recorded solar revenues of $0.08 million and $0.06 million, respectively, for the provision of solar installation services to the Executive Chairman. As of June 30, 2020 and December 31, 2019, the Company had $3 thousand and $51 thousand, respectively, outstanding in accounts receivable related to solar installation services. The outstanding balance was paid subsequent to period end.'
'Solar installation projects are not related to our primary operations and are expected to be discontinued,' says Nikola, but I guess they are doing one last job, specifically installing solar panels at founder and executive chairman Trevor Milton’s house? It is a $13 billion company whose only business so far is doing odd jobs around its founder’s house."
Edit0: formatting.
There is a metric shit ton of pressure on these legacy automakers to compete with Tesla. Sure, you may think Tesla is a relatively small slice now, but the leaders at these companies are extremely scared of falling behind technologically to the point where they are uncompetitive. I'm quite sure a lot of people at GM were skeptical, but I bet a lot of them also did the subconscious calculation "What's worse for my career, losing out on a deal with an innovator like Nikola and falling even further behind, or going with Nikola, in which case if it fails we're not much worse off then we were originally?" Against this backdrop it's easy to see how a scammer can take advantage of this dynamic and even play legacy players off each other, e.g. "Well, you could choose not to invest in us, but then think how much further behind Tesla you'll be. And you know we're talking to Ford, too."
It will really only fail when the money dries up. As long as they can keep raising money, they can keep the fantasy alive long enough to lure in other investors.
Before you downvote this, keep in mind that the founder comes from a Mormon background - perfect upbringing to be trained as a salesman
Another example of selling snake-oil ideas comes from the author of the book "The 7 Habits of Highly Effective People":
"According to Clayton Christensen, The Seven Habits was a secular distillation of Latter-day Saint values." https://en.wikipedia.org/wiki/Stephen_Covey
And yet every Tesla owner tells me that their car is just one update away from driving itself across the country.
Milton stated that using a very secure HTML5 supercomputer that's linked on the data network allows them to build their own chips.
These statements are not equivalent in what they imply about the speaker. It's not subtle.
You can watch that talk and see the approach they're taking. Maybe you're more skeptical than they are about the near term possibility, but you can see that the work and progress is real.
The AGI risk is real too.
What Milton said doesn't make semantic sense, it's not a question of timelines.
What's the over/under on cold fusion before self-driving?
It used to be more fun before the search engines start pushing age over relevance, but searching for 'elon musk claims' is entertaining.
I appreciate that what I just said comes with a huge caveat - and that probably 80% of the work will be hammering-down everything else - but consider that Google’s Waymo is already well-past that already.
I just drove my Tesla half way across the country and back last week. And based on the performance of Autosteer and the neighboring car visualizations they're nowhere close to Level 5 self driving.
Love the car and am a big Tesla/SpaceX fanboy. But I won't believe it'll achieve Level 5 until I see it.
Should have added some blockchain while he was at it.
BTW, they sound like idiots to the people that understand the technology but that's a small subset of all people. Most people have even less understanding than the CEO. So they get influence by his charm and finesse. What most people would call BS around here.
Most people do not really know how HTML works, and nobody but technical people should really.
Or at least - they could make major mistakes in communication.
If he was 'my CEO' I would understand that he was trying to say 'Infotainment is a platform, built on extensible tech that everyone knows how to use' - this is fair.
It seems like Nikola is a fraud, but this isn't the red flag actually. This is standard miscommunication.
what is the connection between HTML5 and building your own chips?
If he could talk lucidly about things like HTML I'd think that lent more credence to the possibility he didn't have a clue about hydrogen
edit: for the downvoters, if you haven't seen one of these "bear thesis" articles before, understand you must do at least as much homework as the bear claims to have done before accepting anything you read. Of course Nikola is a dodgy company, but it's also a social phenomenon. That's the value in it for the likes of GM, and also for the average investor -- including the professionals. At one stage YouTube was the largest video piracy company on the planet before a larger company swallowed them up and cut deals to legitimize what they'd done. Meanwhile, everyone knew the brand. You can consider what's happening here to be something roughly comparable
Why should we not assume his HTML5 knowledge is roughly equivalent to his hydrogen car knowledge?
> Trevor claimed that Nikola’s headquarters has 3.5 megawatts of solar panels on its roof producing energy. Aerial photos of the roof and later media reports show that the supposed panels don’t exist.
nothing about his background or experience gives any legitimacy to him being in a position of "electric truck CEO and mogul"
They pulled a truck up a hill and let it roll down unpowered, using it in a video demonstrating their new EV technology when nothing worked. Who does that.
Uber manually arranging a driver / passenger pick up and animating a vehicle on the map along a predefined route, etc. etc.
It’s edgy to say startups do this, but there hasn’t been a startup conducting this level of fraud so openly since Theranos. And Nikola is a publicly traded company valued at billions.
When I look around, it seems more the case that being a better person or a worse person both take a lot of work. "Chaotic neutral" is probably cake by comparison.
If you want to be a billionaire you have to practice, practice practice taking more than your share, and some days that'll count for a percentage of your goal. Or put more simply, it's not about the $50k, it's about the muscle memory.
If you've really thought through it and still figure it's a good idea, I'd honestly like to stay as far away from you as possible. Because I'm pretty sure that would represent a judgement that's at best very unsound, and in the more likely case indicates a personality that's dangerous to their surroundings.
Not just that. It is still a very, very big world to ply their scams upon. While it has gotten a little better with the Net, there is still plenty of room to work with.
There are still tradespeople that still rack up a pile of pissed-off clients and lawsuits, then walk away to another province/state.
How many utterly toxic managers have you worked with that completely trashed a department to glorify themselves, collect the big bonus check in Year 3, then walked off to the next company before the entire rickety house of cards comes crashing down? Until business culture attitudes change on short-tenures, swapping long-term stability for short-term gain remains the easiest scam to run for easy gains.
How many minus-X engineers have you worked with who were extremely good at socializing with management, held up process and procedure as a shield to ward away anyone from asking them to do anything, then pushed to the front of the crowd when a delivery milestone is achieved?
How many products and services outside of your area of expertise have really good marketing, even good "reviews", but upon actual real world use are complete wrecks, or have critical defects that sit unaddressed for years or even decades? Our socio-political-economic system is extremely good at broadcasting the availability of goods and services at light speed, but we're still stuck in the Bronze Age of speaking individually with each other in the market bazaar literally word of mouth to find out the worth of those economic transactions.
There is an entire industry thriving within Amazon's ecosystem doing exactly this, drop shipping from China factories spewing schlock that only marginally works long enough to prevent monetary clawbacks. Personally, there is an entire product category I've tried 7 different vendors all with great Amazon ratings where every single unit has failed within six months of use: Lightning audio splitters (you can split a Lightning port into either two Lightning ports, or a standard mini audio jack and a Lightning port, typically to plug in a headset and keep an iDevice powered at the same time...like needed for regular marathon web conferences where Bluetooth headsets don't last long enough). I made a Franken-dongle comprised of an Apple-branded Lightning-to-HDMI converter, HDMI audio extractor to RCA audio plugs, and RCA audio plugs to female mini jack audio plug to work around this.
It takes a large amount of effort to find reasonable comparisons between products and even then, many manufacturers change up quality when they "reach the top" and want to cash out on "winning" the quality-value race. Todd at Project Farm exemplifies the absurd amount of work it takes to compare pedestrian tools and supplies. The many, many posts in neighborhood chat groups/forums asking for recommendations for a good electrician, HVAC, plumber, dentist, etc. exemplify the general failure to set up non-gamed, non-compromised review systems integrated into the economic system.
And illustrate the general failure of capitalist transactions as we know them today to convey granular merchant-to-customer information like say, a market butcher with a cook: the transactions lossy-compress away all the time-bound and quality-bound attributes of the transaction itself into a single number, and then lossy-compress away again that single number into a multitude of streams of numbers (revenue/income/profit/loss) inaccessible to customers except for the largest publicly-traded entities at the grossest levels, and then lossy-compress away on top of that with credit availability to mask and obfuscate real-time effects. Customers are left with a huge latency between actual supplied quality in real-time to rough reputational "feel" from aggregated opinions over a long period of time.
Fraud is not a bug of such a system, it is a vital operating feature for far too many economic actors.
This is a great example of why shorts are socially valuable. Without that incentive who would go to the trouble of doing all this research to uncover (possible) fraud? This topic that comes up a lot on Money Stuff, where its easier for private companies to hide misbehavior because you can only short the public ones.
Very sad and disheartening to see it continue and get further investment, just make me think that telling the truth does't pay, selling lies does, fake it till you make it taken to the extreme, similar to Tharanos.
The over promise under deliver approach Musk uses annoy's me but there is something real there, real results, Nikloa is literally riding on a play of a name of another company. At least Musk recognizes the issues with Hydrogen and he obviously has a grasp of the technical issues:
It will probably surprise nobody here that the Pareto Principle applies to large scale manufacturing. Hand building a vehicle is 10% of the work, and the other 90% is a very different kind of work and skillset that is easy to drown in. A bunch of things you just figured out how to do well, you need to stop doing entirely because a machine or a vendor should be doing them for you. Along with all the people and equipment you acquired to do it.
You have to stomach writing off a bunch of equipment, swallowing your pride and taking advice from people who have no sweat equity in your company. And as a cherry on top, you probably get to be the asshole that has to fire John Henry, who has been here since before the machines.
Nikola’s Director of Hydrogen Production/Infrastructure Is Trevor Milton’s Little Brother, Who Worked Paving Driveways in Hawaii Prior To Joining at Nikola
Nikola’s Chief Engineer: A Background Largely in Software Development and Pinball Machine Repair
So I looked it up and basically it looks like they acquired a company which was ALREADY listed on NASDAQ then renamed it.
> In March 2020, Nikola announced its plans to merge with VectoIQ[10] Acquisition Corporation[11] (ticker VTIQ), a publicly traded special purpose acquisition company run by former General Motors Co. executive Steve Girsky. This resulted in the combined company being listed on the NASDAQ exchange with the NKLA ticker symbol.[12] Nikola’s stock began trading on June 4, 2020, a day after the merger was completed
Not just any company, a Spac. Special purpose acquisition company. That's their purpose, they're not actually companies, but blank check investment vehicles.
It's a way to go public without an IPO. And unlike reverse mergers with actual companies spacs are clean since they're shell companies.
They're neither shady nor unusual, though.
Don’t forget that “Hindenburg Research” (seriously?!) stands to make many tens or hundreds of millions of dollars based on whether they can convince a significant number of shareholders that what they are claiming is true. And also that if they are successful in doing so that it also becomes a self-fulfilling prophecy.
I have no reason to believe or disbelieve any claims being made in TFA, so the only thing I can say for sure is that that this “report” is in no way altruistic.
One of the very precarious notions around short selling is the financial incentive it provides to ruinously slander a company, and the very meager legal protections a company has against defamatory claims that short sellers make — in the name of “analysis” — against a company that they stand to make a fortune from if it fails.
Without knowing anything one way or another about Nikola, the only thing I can say for certain is that if Nikola misstates a material fact to investors they can go to jail, whereas if “Hindenburg” gets their facts entirely wrong they face no repercussions. They have no duty to the shareholders of Nikola stock, and the legal peril of being even willfully wrong in their analysis is minuscule compared to what Nikola officers could face from the SEC.
That’s just the grain of salt I would carefully consider before reading anything that Hindenburg puts out.
The group releasing the report stands to lose their position if their claims are false or even if the market ignores them. I’d argue it’s a lot harder to convince a bunch of people with long positions making the market that they pumped the wrong company than it is for the makers to ignore the ruse long enough to diversify the inevitable failure and pass it into your retirement fund.
You don't just short companies for fun with no ramifications. I think you’re painting an exaggerated picture of the nature of taking down a company. You only attempt to do so if you are extremely sure of your convictions and have overwhelming evidence to support your case. You make enemies and you risk losing your connection to other market makers.
I came across Nikola last month and didn’t need a report like this to smell something fishy. But this one is especially damning. I see no reason to not believe the evidence in the report.
But I was long Tesla during a similar period in their own existence, while short sellers tried to make a similar case that Tesla was a fraud and certain to go bankrupt any day.
There is always a strong reason to question a report when the authors have an extremely vested interest in people believing it, and in fact when the objective truth of whether they are right is less important than how many people they can make believe that they are right.
>We view the Hindenburg as the epitome of a totally man-made, totally avoidable disaster. Almost 100 people were loaded onto a balloon filled with the most flammable element in the universe. This was despite dozens of earlier hydrogen-based aircraft meeting with similar fates. Nonetheless, the operators of the Hindenburg forged ahead, adopting the oft-cited Wall Street maxim of “this time is different”.
>We look for similar man-made disasters floating around in the market and aim to shed light on them before they lure in more unsuspecting victims.
Looking at this piece I feel like Mark Baum when he met Greg Lippman (changed to Jared Vennett in "The Big Short"): They are "so transparent in [their] self-interest, I kind of respect them."
The fact that big companies and Big CEO's are stupid and incompetent is the interesting thing.
Everyone who worked on this deal at GM should be fired along with the CEO.
I once worked at a 'Big Company' that thought about buying n Mp3 player. Everyone loved their CEO, their pitch, the box, product looked slick.
We were going to buy it. I took it home and tried it and it was garbage.
Literally our M&A team, execs, due diligence and nobody bothered to fing try the dam product* and use a little bit of common sense to ascertain whether it was 'quality' or not.
This was not fraud, and of a much smaller scale, but it's just incredible how big the 'blind spot' so many executives have.
Edit: I said executives were 'stupid' they generally are not. They just have gaping holes in their abilities, that enough ego doesn't allow them to even see themselves. It's understandable they don't want to look weak, but insane that they don't do background/deep checks.
If I were a CEO I would include 'product & IP validation' right up front as part of due diligence - not just by 'accredited people' (because you can't get a 'CA' in tech) but by people you trust.
Edit 2:
"Trevor has appointed his brother, Travis, as “Director of Hydrogen Production/Infrastructure” to oversee this critical part of the business. Travis’s prior experience looks to have largely consisted of pouring concrete driveways and doing subcontractor work on home renovations in Hawaii."
Oh please make this into a Tiger King Netflix special ...
I think the flood of retail investors with disposable income and government benefits is leading to absurdities in market pricing. See: Hertz skyrocketing after announcing bankruptcies.
After all, the stock has dropped 90%, how much lower can it go right?
Well, to the new investors, all the way to 0.
If the stock truly is wiped out and common shareholders equity is 0, you can exercise the put, receive 100x the strike value per contract, and deliver nothing.
Source: https://www.optionseducation.org/referencelibrary/faq/splits...
How long will the fraud last? Isn't your return limited by the difference available under the put?
I generally stick to calls because it's way easier to make money in a company you know is good and it's easier to capture the upside (Peloton for me recently).
Market seems skewed this way, it's a lot harder to correct the price even when you know it's total bullshit. Seems likely to allow frauds to go on longer.
It is. Max profit when stock prices hits zero. It can be still a massive return compared to the premium invested.
Assuming the house of cards falls before expiration, of course.
Premiums are rather high on NKLA puts too.
I would have expected that GM's due diligence team would uncover this sort of stuff prior to taking an 11% position in the company.
Which proves to me, once again, that the way to get rich is to defraud people with a lot of money, and not a lot of insight.
The work they are supposed to be doing for Nikolai is the same work they'll be doing for their own EV trucks (that they'll have to have at some point) so you can look at it as GM being paid by Nikolai for R&D.
I would still not do this deal if I was GM.
The probability of Nikolai bursting in the flames of disgrace and litigation before they'll pay GM for anything is 99%.
GM can only sell 30% of stock after a 1 year (and additional 30% each year after) so by the time they can cash in, it'll likely be worthless.
And Mary Barra will have to explain how she got taken by an obvious fraud. It might end up costing her a job.
It's GM, so it wouldn't shock me. But as others have pointed out, the deal isn't quite as bad as it sounds.
> relying on the 'fake it till you make it' mantra betting other people's money on the outside chance they can figure out how to do what they claim they already do before everyone else catches on.
This really does seem like the de facto path to unicorn status. SoftBank and WeWork, Theranos. I would also throw in the soon-to-IPO Palantir and Snowflake. Both seem to be held in the air on pure hype on incredibly lackluster fundamentals. Uber is a decade old now and no one knows their end game. They seem to either be holding out for all taxi services to die off so they can start fleecing their customers, or on pie-in-the-sky hopes of a self-driving fleet of vehicles (owned and insured by who, I wonder?) I personally don't see anything "free market" about these obvious market manipulations via heavy subsidies. This sort of winner-take-all behavior will likely hurt consumers and choice in the long run.
But back to your main point, this is just the Minimum Viable Product nonsense taken to its logical extreme. How often have you seen the advice to just toss together a demo, fake website, or whatever and collect email addresses and/or get customers paying real money upfront for a product that is pure vaporware? It's the very first thing people tell you to do to verify a market. I have yet to see a startup that wasn't a little bullshit. Perception is reality today. That's what all these "fake it til you make it", "move fast, break things" type of people remind you, relentlessly.
GM also would retain the right to all the fuel credits and those could be valuable.
If Nikola is successful, GM profits with a great deal. If its not GM doesn't actually lose much. only the time it engineers spent on cooperation with Nikola and potentially some tooling cost.
This is within 5 minutes of reading so I don't know where you got the 'end of the article' from.
(I read the report this morning so they didn't added it after ward.)
Reason? I think most readers would stop reading this (IMO) badly written and badly formatted avalanche of statements (which may or may not be true, but the form in which it is presented doesn’t give me confidence that it is) before hitting that info.
In any case, I think the "too soon?" window has closed for the Hindenburg Disaster.
So maybe they are looking for companies that are going to have extreme PR disasters, regardless of actual consequences.
Hedge funds are not usually terribly concerned with marketing image. See, for example, Cerberus Capital Management, the former owner of Chrysler, which saw fit to name itself after a three-headed dog that guards the gates of Hell.
It’s a special kind of pretentious language that people use to make them seem more authoritative or accurate/deliberate. It’s manipulative.
Every group has its own language and jargon, used to signal group membership. It doesn't have to make sense grammatically or logically.
Interesting that GM seems to be making a lot of moves at once.
https://www.cnbc.com/2020/09/03/gm-and-honda-to-estabish-str...
https://www.autoblog.com/2020/07/08/hyundai-xcient-fuel-cell...
And then I ran into this article. https://www.autoblog.com/2020/08/13/nikola-hyundai-hydrogen-...
Trevor Milton, founder of Nikola Corp, said he would like to cooperate with Hyundai. He said he had twice made proposals to Hyundai that were rejected.
Someone sold GM on a fraudulent electric vehicle future? Let's ask some former EV1 owners how that feels.
They are 'the next Tesla' but 'better' because they use 'hydrogen'. And every 'blogboy' knows that hydrogen is the real technology of the future. So when a untypical CEO from a Tesla like company makes big claims and has amazing presentation and videos to back it up, many buy it.
Nikola did clever things like suing Tesla over their truck design, to get massive exposure threw the Tesla hype machine with the moto bad publicity is publicity. They consistently try to get into all the Tesla and EV influences and made it a point of trying to get them onboard. Trever Milon often competing on Tesla, comparing themselves to Tesla and so on.
He literally says things like 'There are few people who can out-Elon Elon but I'm one of them'. That sort of talk sells well.
Nikola for 4 years consistently trying to insert itself into the conversation and that has really payed of for them. They have never done anything but get mentioned right along companies established car makers. In reality Nikola is far less of a company then Rivian, but much better known.
This might be one of the best parts.
https://www.cnet.com/roadshow/news/budweiser-beer-nikola-hyd...
They were one of the very few companies that claimed revolutionary battery technology. This is an instant red flag and a huge one. New revolutionary batteries don't just just happen.
Sila Nanotechnology, is only replacing anode materials, and they have been at it since 2012 and don't expect to be in cars until 2025. Quantum Scape, who want to make Solid State Li Anode batteries is not gone be in cars until 2025.
There were a number of other companies who also did this 'we have revolutionary batteries'. Some actually believed they did. Dyson is a good example, they wanted to create a car, and to achieve their targets, they invested lots of money including in batteries. However since they are a honest company they eventually admired that they couldn't hit their engineering targets and abandoned the project.
A Nikola competitor in the arena of bullshit spinning is Henry Fisker. His first company made lots of nonsense claims, including about batteries, but unlike Nikola they actually went threw the trouble and made some investment in future battery tech, just not credibly commercial ones. They went bankrupt. His new company is right back to the old bullshit spinning way but they have lower their ambitions and just open say they want to buy the VM MEB platform, now they are gone be the most 'sustainable' among other claims.
As a comparison, Tesla 'revolutionary' technology at battery day will likely not be a silicon anode or a lithium anode, those are simply not ready for commercial use. Revolutionary battery technology would be 10-20% energy density improvment and 30-50% longer lifetime maybe 2x faster production speed, and Tesla has been working on this for 5-10 years and have spent many 100s of millions acquiring a set of companies and having research agreement with multiple universities that all work in collaboration. In total I would guess to really bring a new cell to market at scale, you are talking 5-15 years and 5 billion $, and that is still with basically conventional cell chemistry.
Much of the same can be said about Fuel Cells. Toyota, Honda and also the Koreans have been banging their head against the fuel cell wall for 30 years, with heaps of government money to back them up. They know they can't make it work, even with their massive resources. In personal vehicles they are not competitive against EVs in the slights (while also not being an improvement in CO2 compared to Gas) while in trucks they are not competitive with Disel or Natural Gas, and soon electric trucks are gone take the majority of routes over as nobody can compete with their price on these short and mid distant routes.
But Nikola are gone make it, and not for a geographically small place like Japan, but for the gigantic US without much government support either.
Another topic is that of product announcements. If you follow Nikola for many years, or you go back to 2016 and look at their announcements there is a funny effect that happens. People can say about Elon Time what they like, but mostly the products actually do come out and often are improved over the original announcement in a number of ways. Nikola shows the exact opposite pattern. It goes something like this, announce revolutionary new product but its 3-5 years out. Then progressively lower the specs over time, while pushing the time to market out further.
The hype for anything EV related has been insane. Quantum Scape is a fine company for example, but they have valuation that is insane for a company that is not gone make real money for many years and not gone make profits for many more after that. They essentially have a technology that requires a totally new manufacturing system, while competitors like Sila can put their materials in existing facilities claim the same level of improvements. I wouldn't expose myself to a unique technology with so much competition
There are tons of EV startups and they differ widely from Lucid, Rivian being serious companies step by step putting in place a solid car company. Dynamic companies like NIO coming out of China. And there are the bottom feeders like Nikola, Fisker and others that surf on the hype.
This is gone be a massive market shakeout with Tesla being the leader hunted by everybody. Slow moving giants like VW, Toyota and so on finally realizing whats happening and taking methodical step after step. And a massive wave of startups from around the world, especially China trying to be next next big thing. Its gone be interesting to say the least.
If Nikola goes under... GM hasn't lost anything. They can take all the work they did and just use it for their EVs.
This is a marketing video. For all we know that truck could have an engine. I'm talking about a real actual video of the truck doing what it's been proclaimed to do. It's been a few years, it shouldn't be so hard to have a single video of a truck getting close to these targets.
Elon Musk fanboys are jealous that Trevor Milton is doing it better, faster.
Also direct answer to your question: https://money.cnn.com/2012/04/12/markets/ponzi-scheme/index....
https://restofworld.org/2020/how-a-forbes-cover-star-stole-m...
https://www.timeslive.co.za/news/south-africa/2020-09-07-for...
Your taxes will always be supporting their business.
Hydrogen powered ones? Most likely not, unless the fossil fuel industry manages to convince everyone they are still needed.
I'll say it, I have no idea of validity of any of these statements, need to go read. But do remember getting weird stock pump and dump emails about this company a long time ago and it always put a bad taste in my mouth.
