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The Nikola Stock is Headed for a Record Win Streak After the Ev Maker Sued Heavy D, the Founder

April 1, 2024
minute read

Nikola Corp. saw its stock prices ascend on Monday, marking a continued upward trend despite ongoing controversies involving its founder and former chairman, Trevor Milton, who has been convicted of fraudulent activities.

Throughout the trading day, the stock, identified by its ticker symbol NKLA, experienced a 1.4% increase, positioning itself for a ninth consecutive day of gains. This potential achievement would surpass the previous record of eight consecutive gains, which was achieved on November 24, 2020, and was equaled on the preceding Friday.

The day's trading session witnessed significant fluctuations in Nikola's stock value. Initially, it surged by as much as 10.6% immediately after the market opened at 9:30 a.m. Eastern Time, only to later decline by as much as 6.7% before recovering slightly. Trading volume remained robust, reaching 96.3 million shares, surpassing the daily average of approximately 91.4 million shares.

In an official filing submitted to the U.S. Securities and Exchange Commission (SEC) on Monday morning, Nikola disclosed details regarding an agreement made in the summer of 2023 to transfer the Badger EV and related assets to EMBR, an entity predominantly owned by Dave Sparks, also known as Heavy D, and attorney Cole Cannon. Notably, this agreement included a stipulation barring any association between Milton and EMBR.

According to Nikola's statement, the agreement explicitly mandated that Milton be completely disassociated from EMBR and the acquired assets. This measure was deemed necessary due to concerns regarding the substantial damage inflicted by Milton upon Nikola's reputation, finances, and operations. Additionally, the agreement prohibited EMBR from utilizing Nikola's name and trademarks, except those specifically outlined in the agreement.

Subsequently, Nikola observed that Sparks, Cannon, and Milton, labeled as a "disgraced founder and a convicted felon," initiated efforts to influence Nikola's board of directors using EMBR as a platform for their endeavors.

In February, Nikola rebuffed the candidacy of five individuals nominated by Milton's M&M Residual LLC for positions on its eight-member board, despite Milton's status as one of the company's major shareholders. Notably, among the nominees were Sparks and Cannon.

Milton relinquished his role as chairman of Nikola in September 2020, following mounting concerns from investors and regulatory bodies regarding potential misinformation disseminated by the company. In December 2023, he was handed a four-year prison sentence for fraudulent activities related to investor deception concerning technological advancements.

In the recent 8-K filing, Nikola asserted that EMBR had failed to adhere to the provisions outlined in the Badger-sale agreement. Consequently, Nikola announced legal action against EMBR, Sparks, Cannon, and Milton.

Despite the tumultuous circumstances surrounding Nikola, its stock has exhibited a notable year-to-date increase of 20.6%. In contrast, the Global X Autonomous & Electric Vehicles ETF (DRIV) has seen a marginal rise of 0.1%, while the broader market benchmark, the S&P 500 index, has recorded a 9.8% gain over the same period.

Eric Ng
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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