Nikola stocks fall as Trevor Milton resigns as Executive Chairman

Yahoo Finance's Emily McCormick joins Akiko Fujita to break down the latest on Nikola Motor Company, as Executive Chairman Trevor Milton resigns.

Video Transcript

AKIKO FUJITA: Losses are accelerating for Nikola shares today. In the session, the stock down more than 20% now, after founder and executive chairman Trevor Milton resigned amid fraud allegations. Stephen Girsky, a former vice chairman of General Motors and a Nikola board member now taking over as executive chairman, although it's worth noting, Milton still remains Nikola's largest shareholder.

Emily McCormick has been looking at the stock moves today. Emily, there's still an SEC investigation that is going on right now. What are you hearing from analysts in terms of at least the medium term outlook for the stock? How much more downside is there to go?

EMILY MCCORMICK: Well, absolutely, Akiko, and just taking a look at those stock moves that we saw today, we son Nikola's shares down more than 30% in premarket trading. So it has pared some of the worst of those losses overnight. We are still seeing the stock under pressure. It has been under pressure the past two weeks now, following that short seller report from Hindenburg Research with those scathing and numerous allegations of deception by both Trevor Milton and Nikola itself.

Now taking a look here at what sell side analysts are saying about this company, we have Dan Ives of Wedbush out with a note today saying of the surprise announcement quote, is stepping down voluntarily at Nikola will be perceived by the street as a major near-term gut punch for the company's lofty EV ambitions, as he plays a key role strategically in driving the company's vision.

While there will be a lot of worries on the street around Trevor's departure, especially in light of the bear noise recently with the company, going forward, Nikola has a strong bench and now it's all about execution going forward with the General Motor partnership a linchpin to its success. In a nutshell, Nikola is still a prove me stock, which speaks to why we're watching this from the sidelines with a neutral rating."

So that quote in itself speaks to the broader analyst community sentiment around this company, really saying that with Nikola not having delivered any vehicles yet, doesn't have a meaningful stream of revenue actually coming into the company just yet, really going to have to prove itself going forward with this new leadership, with this transition team.

And I also want to point out what we saw from RBC Capital Markets, because that firm actually cutting their price target on shares of Nikola by more than half to $21 per share from $49 with that overhang of the Hindenburg report and SEC investigation playing a key factor here. So certainly some overhang in the near-term on this stock. Remains a prove me story, Akiko, and something to watch in the weeks and months to come.

AKIKO FUJITA: No question we will be watching it very closely there. Emily, thanks so much for that.