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Shares of electric truck maker Nikola (NASDAQ: NKLA) had been on a roll over the last month, but those gains hit a wall today. The stock has rocketed more than 30% higher since early March, and that includes a big drop today.

After dropping as much as 16.5% Tuesday morning, Nikola shares were still lower by 4.5% as of 11:25 a.m. ET. Some of that decline came as many electric vehicle (EV) sector stocks traded lower. But a fresh lawsuit involving the company’s former chairman also is likely weighing on the stock today.

EV demand worries

The big EV news today was a major disappointment from industry leader Tesla for its first-quarter deliveries. Tesla deliveries declined 8.5% year over year and badly missed average analyst estimates. Tesla competes with Nikola with its electric Semi trucks, but there’s little overlap beyond that.

Nikola has also pivoted more toward supplying hydrogen fuel cell vehicles rather than its battery electric heavy trucks. Regardless, Tesla’s miss has investors concerned that demand is waning more than many expected for EVs in general.

But the company-specific news from Nikola was a Securities and Exchange Commission (SEC) filing from yesterday in which it revealed it is still mired in legal conflict with its founder and former chairman, Trevor Milton. Milton was convicted last year on federal charges of securities fraud and wire fraud. But he is still vying to get some aspect of control over Nikola.

In its filing Nikola said that after agreeing to sell its Badger electric utility vehicle and powersports related assets, buyer EMBR has violated agreement terms by teaming up with Milton.

Milton has continued to try to obtain board seats with Nikola. Investors don’t want to see Nikola spend needed capital on yet another lawsuit. With the electric vehicle demand picture also in question, investors don’t want to deal with yet another distraction.

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Howard Smith has positions in Nikola and Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

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