Nikola chairman Trevor Milton's resignation was a shock to industry experts — but they say his experienced replacement may be better equipped for the road ahead (NKLA)

September 21, 2020 at 12:17 PM EDT

Trevor Milton Massimo Pinca/Reuters

Summary List Placement

The fallout is continuing for Nikola following a short-seller's accusations of fraud earlier this month.

Shares of the electric-truck maker fell sharply Monday as investors digested founder Trevor Milton's resignation as executive chairman. The former CEO will still own the largest stake in the company, though it's not clear how much — if any — day-to-day input he will retain in its operations.

Milton's replacement, General Motors veteran Stephen Girsky, is "probably better suited to the next — execution — phase of the company's development," JPMorgan analysts said of the move. Still, the bank warned that Milton's further distancing "could weigh on some of the partner and customer relationships he has forged, and employee morale is probably fragile right now, just as the workload is intensifying and competitive threat looms."

Despite the surprise move, analysts largely remain optimistic on Nikola's future prospects as a hydrogen-infrastructure and services firm, as opposed to merely selling its electric semi and passenger trucks. They've largely shrugged off the company's admission that several of Hindenburg Research's accusations were true, siding with the company that many were taken out of context or are now otherwise irrelevant.

Milton, who became the de facto public face of the company as it went public in June, especially on Twitter, resembled Elon Musk in many ways. Cowen analysts see this as another defense.

"We see Mr. Milton as overly aggressive in the positioning, specifics, and timing of many of the variables he has discussed, but we don't see this as intentional deception, and we note Tesla has done this for years," the firm said in a note Monday, referencing Tesla's many investigations. "We believe the company has nothing to hide."

Now it all comes down to the execution of its F-150 competitor and delivering the trucks it's making with supplier Bosch in Europe.

"Trevor stepping down voluntarily at Nikola will be perceived by the Street as a major near-term gut punch for the company's lofty EV ambitions as he plays a key role strategically in driving the company's vision," Wedbush's Dan Ives said.

"While there will be a lot of worries on the Street around Trevor's departure especially in light of the bear noise recently with the company, going forward Nikola has a strong bench and now it's all about execution going forward with the GM partnership a linchpin to its success."

NOW WATCH: What living on Earth would be like without the moon