> After Theranos and Wirecard, I'm surprised how much benefit of the doubt Nikola is being given
Thank Elon.
His war on shorts has created a narrative that's gotten eaten up in the tech sector. Heck, you can see it in the comments on this post.
We poor tech companies are just the victims of these big, bad, evil short sellers. If you'd just leave us alone, man, so much disruption! We just need a few more billions and, we swear, we'll be profitable in no time.
Edit: Apparently people are getting very confused by the point I'm making here.
I'm not saying Telsa and Nikola are equally fraudulent.
I'm saying Elon Musk is responsible for pushing and promoting a narrative to de-legitimize short sellers, and in doing so, has undermined an important function in the markets that helps prevent companies like Nikola and Wirecard from succeeding in defrauding the public.
Actually, people with engineering backgrounds see a huge difference between Elon and this guy. It is Wall Street who doesn't understand and is afraid to get burnt by NKLA the way other naysayers were burnt on TSLA.
> Actually, people with engineering backgrounds see a huge difference between Elon and this guy.
I didn't say Elon and this guy were similarly shady.
I said Elon has been a huge voice in pushing and promoting a narrative that short sellers are evil, and that then allows frauds like Nikola and Wirecard to flourish.
And I stand by that statement. In what way am I wrong?
Elon has been pushing conspiracy theories about short sellers for years. As a direct consequence of this, there are many commenters on this site who believe that short selling is generally nefarious and some who even think it should be banned altogether.
Funny how the possibility of a lying short seller gets all their consternation while lying CEOs do not.
In case of Tesla we have pretty well document case of short-sellers doing exactly what Elon said. Paid anti-Tesla articles were absolutely a thing that happened. Not to mention a constant stream of other FUD and accusations of fraud.
Tesla has revenues - real revenues at least. They have real products. Nikola? What do they have? Is it their hyrdrogen breakthrough (10% of current cost)? I doubt that's real. Their battery breakthroughs? Again, pretty doubtful that's real.
> Tesla has revenues - real revenues at least. They have real products.
So did Enron. That doesn't mean there's no fraud to be found.
> Before its bankruptcy on December 3, 2001, Enron employed approximately 29,000 staff and was a major electricity, natural gas, communications and pulp and paper company, with claimed revenues of nearly $101 billion during 2000.
Much of that apparent revenue was fraudulent, but not all of it. Enron really was an energy company, but was also engaging in fraud.
Tesla short sellers (TSLAQ) delegitimized themselves pushing nonsense narratives that repeatedly turned out to be false. Nikola's short sellers' research is of far better quality.
Early on in the pandemic a company with the stock ticker "ZOOM" boomed despite being completely unrelated to the communications software (whose ticker is "ZM").
If you look at the HN discussion about Nikola four years ago, it's filled with people pointing to the copycat name as a redflag. So even without hindsight, this was obvious.
> They could have tried a little harder with the name. It makes me take them less seriously with a copycat name like they're not confident enough in their product and need to glom onto Tesla's success. What an awful decision. The truck looks neat, though.
Response to the above:
> I don't think that truck is ever seeing the light of day; the name and the rest of it all seems incredibly unlikely to materialize except as some money in someone's pockets."
Just to show how absolutely demented our financialized economy has become, look at the stock of Tiziana Life Sciences this year, with stock symbol TLSA:
You think it's because the ticker is similar to TSLA? They are trying to develop treatments related to COVID-19, I bet that's the real reason it spiked this year. I don't know anything about the company, just took a minute to look at their website.
Several stocks have seen that kind of spike due to Covid, so it's quite plausible it was just Covid.
Sorrento (SRNE) went from $1.70 in March to $19 due to peddling Covid this and Covid that (currently at $7 with a $1.78 billion market cap).
Moderna (MRNA) went from $18 in February to $95 at the peak of Covid vaccine mania. At the top it had something like a $37 billion market cap, which is not much below Biogen's $44 billion market cap (Biogen has $14 billion in sales and $7 billion in operating income).
At this point it seems like Nikola is not at all what it seems, but I've actually been surprised in the opposite direction.
For a couple days, news of Nikola being fraudulent were all over everywhere, and when I finally clicked on the link, it's from... someone who is obviously shorting the stock. Every short seller ever tries to convince everyone that the companies they're shorting are doing all sorts of shady stuff.
In this case, everything in the report looks legit, but the number of people credulously citing this report without anyone mentioning that Hindenburg has a massive financial incentive to have Nikola implode has been surprising.
Hindenburg has been pretty upfront about their short position, as has most reporting.
OTOH, short sellers actually have skin in the game, they're putting their money where their mouths are. It's an important mechanism in the public market, which counteracts the existing bias in favor of stock value appreciation on account of shareholders endlessly shilling the stock.
The only organizations that publish equity research are investment banks (which rarely publish negative articles since they want to be part of potential future M&A activity), and hedge funds.
This type of research takes significant time and effort, and almost no one else does this except short selling hedge funds.
