01020304050 MILLION0204060$80DAILY NUMBER OF NIKOLA SHARES SHORTED
NIKOLA STOCK PRICE
NOV. 13, 2020
$21.18JAN. 2020 MARCH MAY JULY SEPT. NOV.JAN. 2020 MARCH MAY JULY SEPT. NOV.
SOURCE: S3 PARTNERSMARCH 3
Nikola announces plans
to go public through
reverse merger with
VectoIQ Acquisition Corp.JUNE 4
Nikola begins
trading on the
Nasdaq under
NKLA.SEPT. 8
Nikola and General Motors announce
strategic partnership and equity
investment in which GM is slated to
take a $2 billion stake in the company.SEPT. 10
Hindenburg releases
its report on Nikola.SEPT. 20
Founder and executive
chairman Trevor Milton resigns.FORTUNE DECEMBER 2020 /JANUARY 2021 59as a profession when he published his first short report in 2010. But
in the years following the financial crisis, as investor appetite for
growth stocks drove mammoth valuations, it raised mammoth red
flags for Block. The former attorney went on to become founder and
chief investment officer of Muddy Waters, an activist short firm with
the motto: “Doing the work Wall Street won’t.” His firm’s success in
exposing fraud—and profiting from it—attracted copycats, many of
whom were already raising hell on investor message boards.
Since 2010, Muddy Waters has published short attacks on 38
companies. It came to fame by shorting Chinese firms listed in
North America, then delivering devastating haymakers in the form
of free oppo research published online. In 2011, Muddy Waters took
on Sino-Forest, a Chinese timber firm listed in Toronto, accusing
the company of inflating revenues and exaggerating its holdings.
The report torpedoed the firm’s shares, and it went bankrupt a year
later. Sino-Forest denied Block’s allegations, but Canadian regula-
tors eventually found that its leaders had committed fraud, and the
company settled an avalanche of investor lawsuits. Earlier this year,
Block went after Luckin Coffee. The company later disclosed in an
SEC filing that it had inflated its 2019 sales by $320 million and
costs by $200 million. Its CEO and COO were fired, and the Nasdaqthe low-profile contrarians who bet against the
subprime bubble, to CNBC-darling hedge fund
managers like Bill Ackman and Daniel Loeb.
The new breed—the little big shorts—stand
out because, by and large, whistleblowing and
shorting is all they do. Lately, they’ve delivered
plenty of pelts from publicly traded Goliaths,
powered by meticulously reported jeremiads
whose details rocket across social media and
the business press. And with few exceptions,
they do it for themselves, not for clients: They
place bets with their own dough, which means
many regulations don’t affect them. Ander-
son built a personal short position in Nikola
through the summer as he became convinced
he could take the company down. “It’s a big win
for us,” he says, though he declines to specify
how big. Critics fume that the shorts’ actions
represent a blatant conflict of interest. Pre-
cisely, they fire back—no conflict, no interest.
Carson Block says he didn’t see short-sellingSHORT-SELLERS SLAM THE BRAKES
A blistering report from Hindenburg Research prompted short investors to stampede into
the stock of truckmaker Nikola, as its share price tumbled.