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Comment by bayesianbot | Hacker News Reader

I always wondered how it kept some value for a long time after the Hindenburg Research report[1]. To me, the report (and the CEO's empty response to it) made it clear there was pretty much no value in it, but the stock only lost 50% in the following week.

[1] https://hindenburgresearch.com/nikola/

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I totally agree. But it feels like, at least over the past 20ish years or so, that the increased "gambling-ification" of the stock market has made it so these events take longer to resolve (i.e it takes longer for the stock price to go to 0) even if all participants eventually think it will go to 0.

That is, even though the stock will (and, in this case, did) eventually go to 0 with very little statistical probably of an alternative, there is enough volatility in the interim that stock market participants are just playing that volatility in the short term (i.e. trying to time the market, trying to not be "bag holders" in WSB parlance) even if everyone knows in the long term it's going to 0.

This one in particular was the perfect storm because it was an EV company during an EV bubble / govt subsidy frenzy, combined with the overall auto market being out of wack at the time, and pandemic-era extremely low rates.

SMCI lost 60% after its auditor failed to audit and resigned

after that, it roses 300%

SMCI is also a target of hindenburg

https://hindenburgresearch.com/smci/

before this, I didn't even know that a company that couldn't be audited could still be listed.

Auditing a company is not a normal procedure. Many companies, even in the S&P500, may have trouble during an audit. I remember there was a serious report about GE at one time, they decided to split the company as a response.

By law, any public company in the US (and most other countries) are required to have a financial statement audit. I am sure there are instances where it is not required, but substantially all private companies that have debt are required per their credit agreement to have a financial statement audit completed. I would be interested where you are getting your information that auditing a company is not a normal process.

Public companies have to undergo a financial audit every year. If you’re referring to a tax audit from the IRS, then yes, those are rarer.

It's almost like stock value and real value have been entirely decoupled

I mean they still had ~$50 million in cash on hand, plus some teams and prototypes. I certainly wouldn't have invested, but if you have $50 million, the potential to sell more stock, and a prototype there's still a lot you can do.

If a business has $50 million in cash on hand and no significant liabilities, the business is worth at least $50 million, no doubt.

However that still leaves $29.95 billion of the $30 billion valuation unexplained.

People also bought Fisker cars again, even knowing that the company produced defective cars before going bankrupt last time (which they did again this time).

I think its because Fisker was in bankruptcy and the cars were sold at deep discounts as part of liquidation.

People also bought them well before bankruptcy. I saw them around, and someone at work was telling me how he's buying one.

Maybe because investors assumed they could sell their shares to the next sucker.

How many people who own stocks actually give a shit about the company they invest in (for about 5 seconds)?

But these are customers, not investors.

The reborn Fisker only inherited the brand name, everything from design to manufacturing was entirely new. In hindsight maybe they brought the curse onto themselves...

It was also the same founder. But the name does matter, since it's their reputation.

I watched a Demuro video where he visited Nikola's factory. Yes, the founder defrauded investors, but it's clear the engineers were building real things. They just were nowhere near where the founder claimed. So there is probably some value there, as it's not complete vaporware. But clearly they couldn't turn it around.

> but it's clear the engineers were building real things

Nikola did not build their own vehicles. They bought their vehicles from Iveco in Europe and made small modifications including putting their names on them.

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