- On September, 2020,
I asked this question on Reddit.
Was there ever a company worth 13 billion
before launch of a product?
So, there's no product released
and there's probably not gonna be a product
in the next year or so.
The question is, has this ever happened before?
The post got quite a lot of traction on Reddit.
I got 93 comments on it, and nobody had a good answer.
This could be the first,
the first time ever a company's worth 13 billion
before the launch of a product.
That's just crazy.
At least nobody's ever heard about this before.
How did this happen?
How did a Nasdaq company become worth $13 billion
without having a product and even a product release
in the near future?
That's what I wanna look at.
How could it happen?
Let's look at the backstory,
and some of the backstory is what they call a SPAC.
I want to explain everything, what a SPAC is?
Because there's some magic to the story,
we're gonna look into.
On top of all this, the Nikola story
is being compared to Theranos.
The famous fraud led by Elizabeth Holmes.
There's a big difference though.
Theranos was a private company.
Nikola is a listed company, a NASDAQ listed company.
So, all in all this fascinates me how this company went
from nothing to a multi billion dollar company
in a very, very short time.
- [Announcer] This is Raw Startup.
- I'm the founder of Vivino.
We're the world's largest wine app and wine community
with over 46 million users around the world.
We sell wine for hundreds of millions of dollars every year.
And then IPO could well be something we look at some point.
Let's start by looking at this guy, Trevor Milton,
the man behind everything.
He's from Utah, comes from a Mormon background,
did his mission in the Favelas of Brazil.
In 2015, he founded Nikola Motors
with his brother, Travis.
Okay, this is when the weird stuff starts.
Why is the company called Nikola?
Clearly, he's a big fan of Elon Musk and Tesla,
but calling the couple Nikola?
Okay. Background here.
Obviously, Tesla is named after Nikola Tesla.
And this guy calls the company Nikola.
I mean, putting yourself right behind Tesla is fine
but like name, this feels like a stocky name.
Like why would you call it Nikola?
It's like giving them the same name as Tesla, it's weird.
Between 2015 and March 2020,
Nikola is just another private company.
They make all kinds of lofty promises about the future
and things that may or may not happen,
most of them did not happen.
For this story, March, 2020 is the key moment.
In March, 2020 Nikola merges with a SPAC,
and the day after Nikola is a listed company.
Yes, they go from a Regular Joe private company
to a listed company on NASDAQ.
Okay, let's look up what this SPAC thing is.
SPAC means Special Purpose Acquisition Company.
It works like this. Someone goes out,
raises some money and lists an empty company.
Basically a company that just has a lot of money.
Then they started looking for another company to merge with.
And this company can just list
without having to go through several years.
But doing an IPO is a lot of work.
It takes two, three years.
This is like a shortcut to an IPO because you just merge
into this SPAC.
And suddenly you're listed.
It's like the shell with a lot of money
that's listed waiting to buy somebody.
Then you can buy that company, merge, change name.
Suddenly that private company is now a listed company.
That's pretty much what happened with Nikola too.
In Nikola's case, there was a company called
VECTOIQ Acquisition Corp
V-T-I-Q.O
A SPAC with some money in it,
just waiting for a company to merge with.
There's nothing wrong with a SPAC.
Actually, half the companies getting IPO right now are SPACs
empty companies just waiting to find somebody
they can express IPO. If we can call it that.
The tricky part here is though, once you're listed
you have to behave like a listed company.
You now have to follow all the rules of NASDAQ
and of SEC and so on.
And if you don't, you'll get a big fine.
You could end in prison.
This is serious stuff, as soon as you're listed.
The problem is you go straight from private
to list listed in no time.
Usually an IPO will take two, three years.
You just express lanes to being a listed company.
It's like a child that's like 10 years old
and suddenly they're 21.
That's a tricky one. It's like a fast track.
"Hey, I skipped the teenage years. Now, I'm just a grownup."
That is probably difficult.
And for Nikola that turned out to be very, very difficult.
As an example, Elon Musk got into trouble with Tesla.
He did one tweet about delisting the company.
He should not have done that.
They almost had to throw him out of Tesla,
but they made some kind of deal with SEC.
So, one tweet and you could be in massive trouble.
So, you have to be very, very careful with what you say
and do as a listed company.
Tesla knows this.
I'm not sure Nikola knows this.
Okay, so now they could list it.
Let's have a look at the stock price here, right?
So, they start from the listing.
Nothing really happens until this merger happens
and things start going up slowly.
They started around $10,
in May things start going a bit crazy.
They hit around 30 bucks, you know, not bad.
They just triple the value.
They go down a little bit and then they jumped like crazy.
They get to almost $80 per share.
This company at this point is worth I don't know,
probably over 30 billion.
So, the company that was worth, who knows what?
Maybe nothing, a few months earlier is now worth 30 billion.
This is also when they start getting scrutiny
and people start looking at Nikola, what is going on?
How did this rocket ship just go crazy in such a short time?
Yes. So people really start scrutinizing the company.
And specifically there's something called
Hindenburg Research.
They release a report in September of 2020
with all kinds of accusations.
Let's have a look at some of the stuff in there
and what all other people have found.
Just be aware, Hindenburg Research
is what we call a Short-Seller
which means they make money as the price goes down.
So, they have a clear interest in finding stuff
on the company that doesn't look good.
So, the stock price goes down. That's their job.
They're transparent around that.
But just have that in mind, whatever you hear about Nikola
and the Hindenburg Research.
The core of the report is that they accuse Nikola
of misleading investors in a bad, bad way.
Let's have some examples of what they have found,
and others have found on this.
In 2016, they present a truck and they keep talking
about this fully working truck.
Like Milton keeps saying that it's a fully working truck.
It has now been four years.
And, if that truck was fully working, where is it?
And he even goes like, "All in on this."
He just keeps saying fully working.
- That exactly in our truck, right?
You'll able to see it when you get in the truck
later tonight.
You'll see it up on the screens
are fully functioning screens
but this thing fully functions and works,
which is really incredible.
There's a fully functioning vehicle,
which is really incredible.
You can go through it.
We can change out pretty much everything we want.
All the temperatures.
I mean, this is a fully functioning vehicle.
It's not just a pusher.
- [Heini] Every time he keeps repeating something,
there's something fishy around it.
At least it is 2020 now, that was 2016.
If it was fully working, shouldn't you be selling it by now?
Okay. It gets better in 2018, Nikola releases
this amazing video with the truck in motion.
Look at it go. I mean, it's flying.
It looks like a fantastic truck.
Ready to go off the assembly line,
ready for everyone to buy.
There is a tiny problem though.
The report claims that they push this truck up a hill
and then rolled it down the hill,
and that's why it's in motion.
There might not be any engine.
It's definitely not going on its own power.
It's just rolling down the hill.
The thing about this story that Nikola,
hasn't said it's not true.
They have had a chance to come out
and say this is not true.
So, they've basically confirmed that they pushed
that truck up the hill rolled it down,
changed the angle of the cameras a bit,
so it looks like it isn't going downhill
but basically it's going downhill.
I mean, this is just crazy.
A company claiming this kind of stuff
is just not being truthful.
Okay. One more of these stories,
several claims that their factory is off the grid
and they generate so much solar power.
Obviously, if someone takes a look at satellite photos,
guess what?
No panels, how do you run a factory with solar power
if there are no panels?
And this just keeps going.
There's just too many things here that aren't true
or they can't give an explanation on what happened.
The thing about something like this,
this is not just a founder
trying to sell any future value here.
When it's a listed company,
these people are making massive amounts of money.
And this is sort of Trevor Milton starts getting real,
real attention and scrutiny.
He keeps talking the stock up
and he becomes richer and richer in real money.
He gets even more attention
when he buys the most expensive house in Utah,
a $32 million house.
This house is just massive.
Okay. I could keep going with these stories about Nikola,
but let's have a look at how it all unravels,
come September, and things start falling apart.
The Hindenburg reports come out
with all these wild accusations,
which they could be true or not true,
but they can't bring a good answer.
I mean, if they're 30 accusations and you only get an answer
to 10 of them, what about the other ones?
To make matters worse and somebody's good at making matters.
Just really, really good at making matters, even worse.
Trevor comes out on social media,
right after the report comes out and said,
"We'll be right back within hours
with response to every single question."
And then what happens? You know, silence, nothing happens.
They do not bring a good response to all of these questions.
Then you have to assume the things
that you don't respond to.
They're probably true.
The truck being pushed up and then rolling downhill,
probably true.
That goes on for a few days.
And the next thing we hear is that Trevor Milton
is out of Nikola. I mean, he is Nikola.
So, that in itself is interesting,
but can they save this company?
That's a good question.
I personally, I don't think so.
I'm just not sure there's enough in this company. I think.
And that's what puzzles me at this point.
Again, this is just speculation from my side.
I'm not giving anyone advice on anything,
but I just can't believe that this company
is still worth now $7 billion.
Why are people still buying this stuff?
We don't think a lot of what's said
about this company is true.
Time passes on, end of September.
Suddenly Trevor Milton, again, he was Nikola.
He was also Mr. Social media.
He disappears from social media,
gone under the radar, not a word.
So, now everyone's just waiting, what's next here.
But again, big company, as of end of September
is still worth $7 billion that could change quickly.
But that's where we are right now.
You know what Trevor?
I'll give you a compliment before we go.
Your big idol, Elon Musk,
obviously, he's better at building, basically everything
rockets, cars, he's actually done all these things.
You name your company, Nikola, just like Tesla.
Again, weird.
But I will say one thing, maybe it's your Mormon background
but you are a good preacher man.
You are incredibly good on stage
and much better than the Elon Musk.
So, here's a compliment for you.
You are a lot better on stage than Elon.
So, at least you can take that with you.
All that said, the core problem here is that
we have these companies that suddenly fall apart.
We've seen Theranos, which probably was a fraud.
We've seen WeWork, which wasn't well-managed,
let's put it there that way, I did a video on it.
You should definitely watch it.
Crazy, crazy story.
But there's a difference here.
Theranos and WeWork were private companies.
Nikola is not a private company.
Nikola is a listed company.
They are on NASDAQ, governed by the SEC,
we're supposed to believe everything
these public companies say.
I think there's a major problem for NASDAQ and the SEC,
how can a company suddenly be worth $30 billion
with no product, no revenue, no nothing?
That's all we have today.
Thank you very much for watching,
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if you enjoy this type of content, thank you very much.
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