Last week we told you about Hindenburg Research and how they are in the business of shorting stocks. They’re the firm that came up with some of the shaky news surrounding Nikola Motors. That ultimately led to the founder leaving and a whole set of problems that continue right up to today. Now it seems, it’s Lordstown’s turn in the barrel. Hindenburg has revealed news about Lordstown Motors that has gotten the attention of the feds. Are they closing in on Lordstown?
Lordstown announced the Securities and Exchange Commission wants some answers
Today Lordstown announced the Securities and Exchange Commission wants some answers. A lot of these electric vehicle startups are in what is called “pre-revenue” periods. They’ve had investors dump millions into the startup without any actual product. This is done through “SPAC” led retail investing. Invariably, without product to sell losses mount during these long product development periods.
Lordstown has reported a $101 million loss in 2020 and expects more losses to come. It also says it is still working toward production to begin in September of its Endurance EV pickup truck. Lordstown CEO Steve Burns said the following in an earnings call yesterday,
“We want to take a moment and acknowledge that we are aware of the short-seller’s report. That is all we can say, and we cannot comment on this during the Q&A period following this call, or any follow-up questions and conversations until the special committee has finished its review.”
Lordstown attributed its only prototype burning up to “human error.”
To blunt the news in Hindenburg’s report Burns revealed Lordstown also has a commercial van it plans to reveal this summer. A large SUV is also in the works according to Burns. Then, with the news earlier this week of its first prototype truck burning to the ground just a few miles into testing, Lordstown executives attributed it to “human error.”
Burns continued, “We’re prepared to get all the way to the promised land with the funding we have. There is no company on Earth six months away from entering into mass production … of a full-size electric pickup. We are maniacally focussed on bringing a car to maturity and to production in September.”
Hindenburg says Lordstown is three-to-four years from seeing production
Unfortunately, the Hindenburg report says Lordstown is three-to-four years from seeing production. Worse, it says that the 100,000 pre-orders that Lordstown quotes often, especially during fundraising, are “largely fictitious.” It goes on to get into the specifics of its allegation that Lordstown is deceiving its investors and the public.
Basically, Hindenburg says these “very serious” orders are actually non-binding. And they’re mostly from companies that don’t currently have or even need truck fleets. One only has a mailing address at a UPS Store. Clearly, this is all damning information if it is true as Hindenburg says it is. Much of this information comes from former employees. Whether they have axes to grind remains to be seen.
As it has with Nikola, Hindenburg has taken a short position with Lordstown shares. This is developing and we’ll see what the SEC and Lordstown have to say in the coming days. But right now, things don’t look promising for Lordstown Motors.