Experts React To Nikola Sell-Off: 'It's Not Too Late To Get Out'

An extremely difficult week for Nikola Corporation NKLA investors became even worse Wednesday, with the stock down more than 10% midday.

The move comes after co-founder Trevor Milton stepped down from his role as chairman earlier this week following accusations by short seller Hindenburg Research that the company is an “intricate fraud built on dozens of lies.”

While die-hard Nikola investors are buying the dip, some Wall Street experts are telling investors it’s not too late to get off a sinking Nikola ship.

Voices From The Street On Nikola: On Monday, Muddy Waters Capital founder Carson Block told CNBC that even without Milton’s involvement, the issues that Hindenburg raised suggests the EV developer has credibility problems — and investors should be skeptical of Nikola’s technology.

“Does it say anything about the technology? Yeah, I think you can infer that there could be more issues there that we would have otherwise thought,” Block said.

On Tuesday, CNBC’s Jim Cramer said Nikola is still a sell even after Milton’s departure.

“When you see a bunch of bright red flags, you have to sell and sell quickly, even if you still have conviction,” Cramer said. “When you’re investing, the only thing more important than making money is not losing money.”

Former hedge fund manager Whitney Tilson said last week that he believes Milton will ultimately end up serving jail time for securities fraud.

This week, Tilson reiterated his belief that General Motors Company GM will cancel its $2-billion partnership deal with Nikola, leaving Nikola dead in the water.

“Good riddance to this obvious coward — and con man,” Tilson wrote in his newsletter this week following Milton’s resignation.

“If you got sucked into this fraud, thinking it was the next Tesla (TSLA), it's not too late to get out.”

NKLA Price Action: Nikola shares were down 11.4% at $25.26 at last check Wednesday. 

Benzinga’s Take: For better or worse, ongoing investigations by the Securities and Exchange Commission and the Department of Justice will ultimately shed some light on what is or isn’t going on at Nikola. Until the results of those investigations are released, investors should consider buying Nikola shares to be nothing more than pure speculation.

Related Links:

Tilson Says Nikola's Trevor Milton Will Land 'Behind Bars For Securities Fraud'

Why A Nikola Short Squeeze Could Be Coming 'Very Soon'

Photo courtesy of Nikola.