On Wednesday, electric truck startup Lordstown Motors acknowledged a request for information from the U.S. Securities and Exchange Commission, after short-seller firm Hindenburg Research said the company misled investors on the timeframe for its upcoming truck, the Endurance. If that name sounds familiar to you, we are talking about the same Hindenburg Research that targeted Nikola Motors late last year with fraud allegations.
According to the Hindenburg’s efforts, Lordstown misled investors as it pointed to its pre-order book as signs of customer demand. “Our conversations with former employees, business partners and an extensive document review show that the company’s orders are largely fictitious and used as a prop to raise capital and confer legitimacy,” their report says. After acquiring General Motors’ defunct Lordstown, Ohio plant in 2019, Lordstown Motors went public in 2020 with the goal to raise capital and make it to market with the first mass-market electric truck.
CEO Steve Burns did not directly address Hindenburg’s allegations by name, but did insist the company was complying with the SEC request on a Wednesday earnings call. “Our interaction with our customer has allowed us to gauge demand,” Burns said on the call. The company also insisted it is putting together a special committee to look into the accusations. When asked about how he characterized “orders” in a CNBC interview Thursday, he insisted that the 100,000 figure touted in January were ‘non-binding’ pre-orders. “We’ve always been very clear, right? These are just what they’re intended to be. These are non-binding, letters of intent,” he said on CNBC’s “Squawk Box”. Hindenburg Research, for its part, insists Lordstown deliberately tried to dupe investors by referring to deals as firm orders, often made by companies with no physical fleets.
Lordstown Motor Corp shares slid 12 percent as of Thursday morning on news of the SEC request, Reuters and other outlets report. Nikola’s stock slumped in a similar fashion last year after a key investor cut ties.
Now, analysts are looking at Lordstown abilities to still produce the Endurance — which it aims to do by September — to right its share prices. In doing so, it would also head off Hindenburg’s focus on the company not having an actual product. Lordstown’s long-term fortunes, though, may well rest on how it handles the recent scrutiny, including regulators’ growing interest in the company’s workings.
