Nikola, which went public via a SPAC, is accused of deception

Hindenburg Research accuses Nikola of lying. Nikola says it’s a “hit job.”

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Electric-truck maker Nikola led the wave of mergers with blank-check companies this year.

In March, it agreed to merge with VectoIQ Acquisition Corp., a SPAC created solely with the purpose of acquiring another business, with Fidelity and ValueAct supporting the deal with a $525 million private placement. And riding on Tesla’s soaring stock as well as a recent partnership with General Motors, Nikola’s valuation has exploded to $14 billion (compare that to its $3.3 billion price tag when its plan to go public was first announced).

On Thursday, Hindenburg Research, a short seller betting against the zero-emissions startup, accused Nikola of making a series of deceptive public statements and false representations regarding its technology and business in a scathing report.

Per my colleague David Z. Morris, it makes a claim that is somewhat…unintentionally comedic:

“The Hindenburg report’s most striking claim is that a January 2018 video purportedly showing a Nikola One hydrogen fuel-cell semi truck moving under its own power was staged. According to Hindenburg, the video in fact showed the truck rolling down a long, gentle slope. Hindenburg’s report includes a test confirming that the section of road shown in the video could accelerate a coasting vehicle to highway speeds, along with text messages from a former Nikola employee appearing to confirm the tactics.

Given these claims, it is notable that Nikola repeatedly described the video as showing the truck “in motion,” which would be technically true even if the truck were not moving under its own power.”

Nikola refuted the allegations, calling Hindenberg’s report a “hit job for short sale profit driven by greed.” The company made allusions to potential legal action and also said it plans to bring the report to the attention of the Securities of Exchange Commission.

Of course, short sellers are sometimes wrong and they do have financial incentive to tarnish a company’s image. But they’ve also been very, very right before.

And this brings me back to Nikola’s decision to go public via SPAC: Despite the financing method’s raging popularity in 2020, SPACs are still trying to shed their historical association with fraud. And while proponents emphasize the limited risk of investing in a SPAC before it finds an acquisition target (with funds going typically into, say, U.S. treasuries), it remains to be seen what comes after.

EVERLANE RAISES: Everlane, the sustainable fashion brand that has been accused of failing to live up to its ethical image, has raised $85 million in Series F funding led by L Catterton. 

The new funding comes after former employees accused the company of anti-Black behavior and of selling an image “to the world that did not reflect their damaging experiences inside the company,” per the New York Times in July. Everlane later announced that the Chief Creative Officer Alexandra Spunt, who took much of the criticism, would no longer lead the creative team. In response to the report, Everlane CEO Michael Preysman told the Times that the company would open up a seat for a Black board member, roll out anti-racism training, and add a Black person to the senior leadership team.

With the most recent funding round, Everlane added Jonathan Mildenhall, CEO of TwentyFirstCenturyBrand, and Matt Leeds, Partner at L Catterton, to its board of directors. Mildenhall is of a mixed-race background.

Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com