Trevor Milton, the Founder of EV maker Nikola (NASDAQ:NKLA), is going to prison for four years for defrauding investors. Witnesses testified that Milton lied about nearly every aspect of the company to ordinary investors, reported the Wall Street Journal. However, Nikola itself might see some progress in the upcoming quarter.
Reminiscent of the shenanigans at Theranos, Mr. Milton lied about non-existent sales orders and the company’s prototype zero-emission truck. He was convicted of multiple fraud charges last year, and prosecutors had sought more than 10 years of prison time for his conviction. Further, Milton has been ordered to pay a $1 million fine and forfeit a property in Utah. However, he can remain out on bail while appealing the conviction. Reportedly, prosecutors estimated the total loss from the fraud at over $660 million.
Nikola, on its part, has shelled out $125 million to settle an SEC investigation without admitting or denying any wrongdoing. Recently, the company was awarded $165 million in arbitration in its efforts to recover the settlement amount from Milton.
Milton’s misleading claims about the prototype truck–it did not have any hydrogen components at all–and a promotional video showcasing the company’s truck being rolled downhill to demonstrate its functionality eventually led to a short seller report from Hindenburg Research about the company.
In the meantime, Nikola shares have nosedived by over 95% over the past three years. In the most recent quarter, the company shipped three trucks. It incurred a net loss of $425.7 million, compared to a net loss of $236.2 million in the year-ago quarter. For the upcoming quarter, Nikola anticipates revenue to be in the range of $11.25 million to $18.75 million on estimated truck deliveries of 30 to 50 units.
What is NKLA’s Target Price?
Overall, the Street has a Hold consensus rating on Nikola, and the average NKLA price target of $1 implies a nearly 22% potential upside in the stock.
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