Trevor Milton, founder of Nikola, speaks during a presentation of his new all-electric and hydrogen fuel cell battery trucks in partnership with CNH Industrial at an event in Turin, Italy on December 2, 2019.
Massimo Pinca | Reuters
Nikola shares rebounded from early losses on Monday as the electric vehicle start-up denied fraud claims by short seller Hindenburg Research last week.
In a statement Monday, the company said the report contained "dozens" of inaccurate allegations and outlined specific examples.
But Nikola doesn't deny one of Hindenburg's biggest claims – that it staged a video showing a truck that appeared to be in working order but wasn't working, as well as claiming that the truck was fully working.
Nikola shares rose by around 5% on Monday afternoon. They closed at $ 32.13 on Friday, increasing market cap to $ 11.6 billion after falling 14.5%.
Regarding the video, Nikola said that "in the video she never stated that his truck was driving on its own, even though the truck was designed to do exactly that". However, there were also no disclaimers that the truck did not work on its own.
"It was never described as 'self-propelled' or 'drivetrain powered'," the company said. Nikola said investors at the time knew the capabilities of the prototype vehicle and called the 3-year-old video "irrelevant, except that the short seller is trying to use it for his main thesis".
The company said it "ultimately decided not to invest additional resources" to complete the vehicle. Instead, resources have been shifted to another pickup truck, the Nikola Two, which the company has shown is self-powered.
Hindenburg said the truck was "towed up a hill on a remote stretch of road and simply filmed as it rolled down the hill". It was then used in a video that Nikola said was created by a third party in which the truck appeared to be driving on flat roads on its own drive.
The video was one of several claims in the company's report, titled "Nikola: How to Partner an Ocean of Lies with America's Largest Automaker".
The allegations came days after General Motors announced it would acquire an 11% stake in Nikola. GM said it plans to produce Nikola's battery-electric pickup truck The Badger by the end of 2022.
Hindenburg accused Nikolas founder Trevor Milton of making false statements about the company's technology to grow and partner with auto companies.
Nikola has denied the claims, calling the report "a hit for short selling driven by greed". The company said it had contacted the Securities and Exchange Commission with "concerns about the Hindenburg report." It has also retained a law firm regarding possible legal action.
In other cases, Nikola said Hindenburg misrepresented a quote from an employee of the automotive supplier Bosch, a partner of the company. misrepresented comments by Milton about possible advances in the company's battery technology; and falsely linked the departure of a chief financial officer to deposit refunds on versions of the company's first generation semi-trailers.
Nikola did not respond to other claims made by Hindenburg. These allegations included the alleged misrepresentation of the Nikola One's capabilities during the vehicle's unveiling in 2017 and allegations that the company's headquarters were offline.
Hindenburg founder Nathan Anderson said the company found Nikola's statement on Monday "totally inadequate".
"Nikola had previously promised a punctual counter-argument to our report, and this morning's press release failed to deliver on that promise," Anderson said in an email to CNBC. "In the few areas where the company has responded, it has largely confirmed our findings or simply raised new unanswered questions. We will provide a detailed answer."
In a tweet Monday morning, Milton said the company was "delivery focused" – something analysts like Daniel Ives of Wedbush Nikola have recommended to investors.
"While we look forward to management addressing some of these issues, we continue to believe Nikola is now a story and it's about execution through 2023," Ives said in an investor note Monday.
Ives said that if Nikola can achieve goals like completing an assembly plant in Arizona and building salable models, the opportunity for inventory "is huge and inventory will reflect that dynamic."
– CNBC's Leslie Josephs contributed to this report.