Lordstown Motors CEO, CFO Resign Amid Chaos for the Electric Vehicle Brand
Last week, Lordstown Motors announced the brand might not have enough cash to stay afloat over the next year. Now, it appears the ship is continuing to sink with the announcement that some key players are leaving the company. Is the electric vehicle manufacturer dead before it produces its first electric vehicle?
Why is Lordstown Motors stock dropping?
Lordstown Motors founder and CEO Steve Burns and Chief Financial Officer Julio Rodriguez officially stepped down this Monday morning. According to Reuters, the company recently did an internal investigation with Hindenburg Research LLC. Hindenburg is a firm that focuses on short-selling companies.
The investigation found that Lordstown overstated the pre-orders for the electric vehicle trucks in development. However, Lordstown rejected the idea that the company misled investors about future production plans.
Angela Strand was named as the newest executive chairwoman of the company. She was already the lead independent director but will take over until the company finds a more permanent CEO. Becky Roof was named as the interim finance chief.
Lordstown Motors continues to flounder
The Lordstown Motors stock (RIDE.O) found itself in a free-fall after the announcement last week. Back in February, the price stock was near an all-time high of over $30. The stock was lingering around $11 at the end of last week but has continued to fall to under $10 a share at the time of this announcement.
After growing concern the company was not doing well, Lordstown tried to soothe feelings by announcing it was in talks with other sources to raise funds. “In March, Hindenburg disclosed that it had taken a short position in Lordstown stock, saying the company had misled consumers and investors,” Reuters said. While Lordstown claimed it received enough orders to satisfy internal numbers, Hindenburg found many “fictitious” orders.
In addition to this drama, the U.S. Securities and Exchange Commission (SEC) has started a new investigation. The SEC requested more information about the SPAC merger and the misinformation related to the preorders.
The hits keep on coming for the company
According to Investors Business Daily, Lordstown Motors currently has about $587 million on hand. Unfortunately, the brand also says this is not enough to start commercial production of the electric truck, Endurance. “These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of at least one year,” Lordstown said in the filings.
While $587 million is enough to keep trucking along, for now, it won’t be enough to begin production of the brand’s only vehicle. The company claims it does not currently have debt and talks with other companies to raise more cash.
Burns was also the CEO of Workhorse Group, which also produces electric vehicles of a different kind. It seems as if he might be retooling his personal plans to go back to his former company. While this isn’t unusual, it doesn’t bode well for the future of Lordstown Motors. The company has an event planned for the end of June that will bring investors to tour the facilities and meet with management.