Lordstown Motors creates committee to review short seller claims
Detroit — Lordstown Motors Corp. did not respond directly to claims made by a short seller that it misled investors during its inaugural earnings call Wednesday. Instead, CEO Steve Burns said the board of directors "formed a special committee to review these matters."
The company has received a request for information from the SEC and is cooperating with that inquiry, Burns also said.
The electric vehicle startup, which reported a 2020 net loss of $101 million and cash of $630 million at year-end, was called out in a Hindenburg Research report last week for being a company "with no revenue and no sellable product" that "has misled investors on both its demand and production capabilities."
Lordstown Motors is still pushing forward with production of its Endurance electric truck starting in September out of the sprawling former General Motors Co. plant that the startup bought in 2019 after GM halted production there. The company is also developing an electric van on the same platform that would go into production in the second half of next year.
Lordstown plans to have its first Endurance beta builds complete this month, Burns said on the earnings call with investors: "With beta production now underway, we are able to to obtain more substantial levels of commitment from our prospective customers."
We're offering a great deal on all-access subscriptions. Check it out and support local journalism here.
Lordstown Motors President Rick Schmidt said the company is expecting "additional capital and operating expenditures" for tooling needed to accelerate production capacity to 60,000 vehicles, to increase the time to market for its electric van and for higher costs due to COVID-related supply chain issues.
The Hindenburg report, among other claims, calls out Lordstown Motors for the 100,000 pre-orders of trucks it continues to tout, claiming that these orders "are largely fictitious and used as a prop to raise capital and confer legitimacy."
Hindenburg provides the example of a 14,000-truck deal from E Squared Energy, which the firm says is "based out of a small residential apartment in Texas that doesn’t operate a vehicle fleet."
Hindenburg — which specializes in forensic financial research, according to its website — took a short position on the Lordstown stock, meaning it stands to gain if the shares lose value. Lordstown's stock closed at $15.09, down 13 cents from open.
Hindenburg is the short seller that also claimed EV and fuel-cell startup Nikola Corp. misled investors by misrepresenting its technology and manufacturing capabilities, including that it had staged videos to make non-functional vehicles appear to operate.
After the Hindenburg report, GM drastically scaled down a partnership with Nikola from previously planning to take a stake in the company to only signing a global supply agreement to provide its Hydrotec fuel cell system for Nikola’s Class 7/8 semi-trucks.