Hindenberg report that followed Bloom critique sparks sell-off at electric-hydrogen vehicle start-up

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Hello everyone,

Few outside of the green vehicle world had heard of Nikola until fairly recently.

Then came a stock offering for the Phoenix company that wants to build a hydrogen-powered big rig and an electric pickup truck.

The enthusiasm for green vehicles has pumped up valuations of industry leader Tesla and led smaller fry to issue stock.

Six-year-old Nikola scored a coup when GM agreed to take an 11 percent stake and earlier announced plans for a 1 million square foot assembly plant in the one-time cotton farming town of Coolidge, AZ.

Then came Hindenberg. The short-seller looks for companies that have over-hyped their place in the universe.

The reports are posted on the web with provocative headlines that included the following.Nikola: How to Parlay An Ocean of Lies Into a Partnership With the Largest Auto OEM in America.

Hindenbergdug into the background of the founder and company claims in a scathing critique. With billions of dollars of investor money in play, Wall Street paid attention.

Nikola’s founder Trevor Miltonresigned, vowing to clear his name as the company’s stock price took a tumble. GM caught up in the brouhaha, stated that it had done due diligence.

A Justice Department investigation is currently underway.

If the name Hindenberg sounds familiar, it may be due to a previous report on Bloom EnergyBloom has its main fuel cell assembly plant at the University of Delaware STAR Campus in Newark.

At a time when its stock price had plunged into the $4 a share zone. The Hindenberg report was the latest of a number of stories and reports on a Silicon Valley company with a debt-laden balance sheet and no immediate prospects of profitability.

In Delaware, Bloom has long been the subject of controversy, thanks to a deal years ago with the state. In return for building the plant, Bloom servers feed power from its fuel cells into the Delmarva Power grid.It turned out that wholesale electric rates have remained low and Delmarva customers have been paying premium prices for Bloom power.

Meanwhile, Blooom’s employment has been a fraction of early projections.

The Hindenberg report, which was refuted by Bloom, did not have a long-term effect on the company’s stock price.

Bloom has since fired off a flurry of announcements that include technology that can produce hydrogen. The company’s Korea focus includes powering ships and widespread deployment of its fuel cells with partner in that nation.

Bloom has also cut the cost of producing fuel cells, improved efficiency of their “Bloom Box, and sees vast potential in becoming part of mini-grids that can power public safety facilities, hospitals, and other facilities during blackouts.

Bloom’s home state of Califonia would seem to be ripe for such systems, due to wildfires that lead utilities to cut off power. While Bloom has profited from California’s energy policies, the state is now struggling to come up with a mini-grid strategy.

Meanwhile, Bloom shares are now trading in the $15 range, well off the high of more than $30, but well above the figure that came at the time of the Hindenberg report.

Nikola investors, other than short-sellers, are hoping that things will stabilize and lead to a Bloom-style recovery. –Doug Rainey

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