Nikola stock plunged yesterday after its founder Trevor Milton was indicted on charges of fraud. The stock is now down 61% from its 52-week highs. What’s the forecast for the NKLA stock and should you buy it after the crash?
A federal grand jury has charged Milton with three counts of criminal fraud. “This is a very straightforward case, Milton told lies to generate popular demand for Nikola stock, Beginning at least in or about March 2020, when Nikola announced that its stock would become publicly listed, Milton became increasingly preoccupied with keeping Nikola’s stock price high,” said Attorney Audrey Strauss at a press conference.
Milton has been accused of lying about “nearly all aspects of the business.” The company went public last year through a SPAC reverse merger. 2020 was a red-hot year for electric vehicle companies going public through a reverse merger. Apart from Nikola, Canoo, Fisker, and Lordstown Motors also listed through a SPAC reverse merger last year. UK-based Arrival also opted for a SPAC reverse merger. The most recent one to join the league is Lucid Motors which has merged with Churchill Capital IV (CCIV).