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London (CNN Business)Nikola founder Trevor Milton has stepped down as executive chairman after a short seller accused the hydrogen and electric truck startup of misleading investors and overstating the value of a business deal.
Milton has also resigned from the company's board, Nikola said in a statement on Sunday. The company has previously denied the allegations and threatened legal action against the research company that made them.
Stephen Girsky, a former vice chairman of General Motors (GM) and current board member at Nikola, will take over as chairman with immediate effect.
"The focus should be on the company and its world-changing mission, not me. I intend to defend myself against false accusations leveled against me by outside detractors," Milton said in a statement posted on Twitter.
Hindenburg Research, which makes money by betting against companies, published a report earlier this month alleging a range of misdeeds at Nikola, including that Milton presented a prototype truck as being closer to market than it was. The report also said that Nikola mischaracterized a business deal as being worth more than it was.
Shares in the company have dropped by more than 19% since the report was published by Hindenburg. They fell as much as 24% in premarket trade on Monday.
"These allegations by the short seller are false and misleading, and designed to manipulate the market to profit from a manufactured decline in Nikola's stock price," Nikola said earlier this month in response to a number of Hindenburg allegations.
Nikola said it has hired a law firm to explore legal action against Hindenburg and that it plans to bring the matter before the US Securities and Exchange Commission.
In the days before Hindenburg published its report, Nikola received a boost from General Motors when the carmaker said it would help the upstart develop its new models in exchange for an 11% stake.
General Motors executives said the company had conducted "appropriate due diligence" before signing the agreement with Nikola.
Girsky brings an extensive background on Wall Street to the top job at Nikola. Before joining GM as a special adviser in 2005, he had spent a decade as managing director and auto analyst at Morgan Stanley. He also served as an executive at investment firm Centerbridge Partners.
— Peter Valdes-Dapena contributed reporting.
