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Carson Block, Wilfred Frost Get Into Heated On-Air Argument About The Merits Of Sell-Side Research

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Carson Block, Wilfred Frost Get Into Heated On-Air Argument About The Merits Of Sell-Side Research

The normally jovial "Closing Bell" broadcast took a heated turn on Monday thanks to a short seller and one of the most controversial stocks of the year.

What To Know: Carson Block, founder of Muddy Waters Research, was a guest on CNBC's "Closing Bell" program. The hot topic of the day was Nikola Corporation (NASDAQ: NKLA), the electric truck maker whose stock peaked near $80 a share earlier this year but currently resides under the $28.

Nikola's stock fell 19% Monday after founder Trevor Milton stepped down as the company's chairman and board member.

The company has been under intense pressure this month following a short-seller report from Hindenburg Research that called the company "an intricate fraud built on dozens of lies." The SEC and Justice Department are currently investigating Nikola.

See Also: Analysts React To Trevor Milton's Departure From Nikola

What Block Said: Block, who doesn't have a short position in Nikola, defended the short report and was "impressed" by Hindenburg's research. With regards to Milton, Block said "even before the resignation this morning, I would say he had no credibility."

The conversation then turned over to the fact that some sell-side analysts have come out in defense of Nikola and its stock.

"Now, what do I make about sell-side analysts?" Block said. "Basically their jobs... they're a highly-paid dating service for institutional investors and the way they really add value to the world is by arranging meetings between institutional clients and management."

Block said it's "no secret that if an analyst is not pretty bullish on a company, most managements will not allow that analyst to arrange the dates."

Frost Gets Defensive: Block went on to say sell-side analysts should be taken as "seriously as a 5-year-old child" and compared the sell-side research to toilet paper.

Frost didn't take kindly to these comments, as seen in the brief video embedded below:

The interview concluded moments later, but made a quick impression on viewers:

Latest Ratings for NKLA

DateFirmActionFromTo
Sep 2020WedbushDowngradesNeutralUnderperform
Sep 2020Deutsche BankMaintainsHold
Sep 2020RBC CapitalMaintainsSector Perform

View More Analyst Ratings for NKLA
View the Latest Analyst Ratings

 

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