Nikola shares slide after second sexual abuse allegation raises questions about GM deal

Key Points
  • Nikola's stock slid by more than 7% on Tuesday after CNBC reported new sex abuse allegations against founder Trevor Milton and General Motors said that it is still in discussions with the electric truck maker.
  • Nikola's deal with GM is expected to close Wednesday.
  • GM told CNBC in an email that it is continuing its talks with Nikola and "will provide further updates when appropriate or required."

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Nikola Motor Company
Source: Nikola Motor Company

Nikola's stock fell by more than 7% on Tuesday after CNBC reported new sex abuse allegations against founder Trevor Milton and General Motors said that it is still in discussions over a $2 billion deal with the electric truck maker, which is expected to close before Wednesday.

Two women have now accused the 38-year-old billionaire in complaints filed with Utah authorities of sexual abuse when both women were 15 years old. The accusations, stretching back more than 15 years, follow Milton's resignation as executive chairman of Nikola on Sept. 21 after short seller Hindenburg Research released a damning report detailing fraud allegations.

GM announced a deal Sept. 8 with Nikola to provide technology to its electric pickups and build them in a partnership the companies valued at $2 billion. The Hindenburg report dropped two days later and it has reportedly sparked inquiries into Milton and Nikola by the Securities and Exchange Commission and Department of Justice.

Former Nikola chairman Milton accused of sexual abuse

GM declined to say whether the company was aware of any allegations of fraud or sexual abuse regarding Milton. GM CEO Mary Barra earlier this month defended the company's deal with Nikola, saying it conducted "appropriate diligence" before announcing the agreement.

The partnership with Nikola is supposed to close Wednesday, but a spokesperson said in a statement to CNBC that it isn't a done deal.

"Our transaction with Nikola has not closed," a GM spokesperson said Monday in an email to CNBC. "We are continuing our discussions with Nikola and will provide further updates when appropriate or required."

Nikola spokeswoman Colleen Robar on Tuesday said, "Both sides are still negotiating. As soon as we have something to report, we will. But it is definitely still continuing."

Since the deal was announced, Nikola shares are down more than 60% – making the company much less attractive to GM. The deal may be terminated by either side if it's not closed by Dec. 3, according to a public filing when the partnership was announced.

Wedbush downgrades Nikola to underperform, lowers price target to $15

GM was introduced to Nikola through Steve Girsky, the former vice chairman of GM who succeeded Milton as executive chairman at Nikola earlier this month. Girsky is a managing partner at VectoIQ, the special purpose acquisition company that took Nikola public. He joined Nikola's board after the deal closed.

Regarding Nikola, Girsky previously said his company "showed up with an army of people to diligence this thing," according to a webcast with an industry show, Autoline, in early August.

"We really crawled all over these guys. It wasn't pleasant at times," he said, adding he didn't "doubt there are going to be twists and turns here, but I did put my reputation on the line for this thing."

Girsky did not return calls or texts for comment. VectoIQ did not return emails. Nikola declined to comment.