Keep on trucking
Nikola's fuel-cell fantasies
Good morning, speed demons. Welcome to another week of Stock Market Rundown. Thank you so much for reading. Let’s dig in:
TODAY’S TOP STORY: BUILDING ELECTRIC BIG RIGS
Diesel-guzzling heavy-duty trucks are a big contributor to transportation’s carbon footprint. Nikola, which was founded in 2014 by former burglar alarm salesman Trevor Milton, aimed to fix that.
Its goal? To develop and market battery-powered and hydrogen-fuel-cell trucks. Sadly, the business drove into a few low overhangs on the road to a sustainable future.
Nikola hyped up its concept vehicles, and built credibility by scoring partnerships with major auto industry players. For a brief shining moment right after going public in 2020, Nikola’s market cap actually exceeded that of Ford Motor Company, making Milton a (temporary) billionaire. What took Ford a hundred years took Nikola only months!
Alas, founder and CEO Milton wasn’t the world-changing innovator he presented himself as. In fact, he was a pathological liar. Soon after the IPO, a short seller dropped a damning report arguing Nikola was “an intricate fraud based on dozens of lies.”
For example: the report pointed out that Milton produced a demo video where a concept semi truck appeared to be speeding along a highway. Actually, it was just rolling down a hill after being towed to the top. That’s one way to eliminate fossil fuels.
Nikola is still a going concern, sort of. It continues to build vehicles at its plant in Coolidge, Arizona. But earlier this year it had to recall every electric truck it’s ever shipped to repair dangerous design flaws that caused battery fires. And multiple top execs have bailed on the business in recent months.
As for Trevor Milton, the SEC slapped him with fraud charges. (His legal team defended him as an “ambitious dreamer,” which has a much nicer ring to it than “unrepentant con man.”) He was found guilty, and will be sentenced this week.
Milton will soon be working in the automotive industry again. But instead of building fuel-cell truck engines, he’s going to be stamping license plates.
SO WHAT ELSE IS GOING ON?
Much like your credit card balance after splurging for bottles of Grey Goose at your best friend’s birthday party, global debt is at record levels. Experts warned this could cause ongoing market volatility, since no politician wants to push the budgetary equivalent of a ramen-noodle diet.
We did it, Joe: inflation has been whipped, with food and gas prices flat over the past few months. But the Fed is cautioning Americans not to expect prices to go back to where they were in 2021. Even the Black Friday sales weren’t that great—only 20% off a SharkNinja blender? Barely worth throwing elbows for.
Bath & Body Works, the store that lets you smell like a vanilla cupcake, lowered sales forecasts as customers cut back spending. I guess Eucalyptus Lavender Shower Steamers aren’t recession-proof.
Corporate debt defaults are up, and higher interest rates are to blame, with borrowing costs for some firms doubling or tripling. Time for office managers to cancel the free kombucha deliveries and switch to one-ply toilet paper in the men’s room.
That’s it for today, my friends; see you bright and early tomorrow morning. Yours in capitalism, The Axe
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