As MotorBiscuit mentioned earlier today both CEO and founder Steve Burns and CFO Julio Rodriguez have bailed on Lordstown Motors. Last week Burns bluntly stated in an SEC filing that if Lordstown was to survive the near future it needed more cash. Of course, the problem with that is it has not produced a single electric truck and few prototypes. But Lordstown has been stating until recently it planned on beginning production in September.
Lordstown investors are, and rightly should be, freaking out
Now the whole company is one hot mess. Investors are, and rightly should be, freaking out a bit over this latest drama. In the short term Angela Strand, currently, Lordstown’s lead independent director will take over as CEO. But only until a new one can be found.
Becky Roof will be the interim CFO, a woman with extensive finance experience. As you would expect shares of Lordstown have crashed. But there is more bad news.
A special board committee announced today that some disclosures it made about its EV pickup “were inaccurate.” This internal investigation was prompted by short-sellers Hindenburg Research labeling much of Lordstown’s orders to be non-existent. That Lordstown itself is now saying Hindenburg might be right (at least about some of Lordtown’s claims) compounds the company’s troubles.
Former Lordstown Motors CEO Steve Burns still holds 27 percent of its stock
But the real fireworks still might be on the horizon. Here’s why. Now former CEO Steve Burns still holds 27 percent of Lordstown stock according to Yahoo Finance. If he decides over the next week or so to dump those shares then the writing is on the wall. That is clearly a signal that the end is near, or even here now.
Former Nikola CEO Trevor Milton sold a bunch of his shares after Hindenburg Research exposed Nikola’s shortcomings in 2020. Dumping those shares has put a lot of pressure on the going price of Nikola stock. It is hard to see Nikola ever coming back from the one-two punch of Hindenburg’s revelations and Milton quitting then dumping the stock.
The other big question is what Lordstown does with its in-hub motor design going forward. This electric power plant is a unique aspect of Lordstown’s Endurance truck. If the new management that will be taking over at some point doesn’t feel it worth further development, then that probably signals the end.
Will Lordstown Motors need more time to develop a new power plant?
Investment firm Morgan Stanley says that “an alternative motor strategy or an entirely different product and go-to-market strategy altogether may be required to preserve sustainable equity value.” If true, that is not good. It would mean that Lordstown would need more time to develop whatever it decided to adopt as a power plant before any trucks began production.
Morgan Stanley goes on to say, “It is our understanding that Steve Burns was the primary proponent of the in-hub motor system.” The inference is that without Burns fathering the system along, there wasn’t much support inside or outside of the company. Further development and delay would be the death knell for Lordstown.
The entire board has been sitting back observing the continuing drama at Lordstown
And finally, some on the board of directors are tight with Burns. So where does his departure leave them? Plus, the entire board has been observing the continuing drama at Lordstown-some would say they helped create it.
So investors-at least those who are left, should and probably will call for the board to be purged with new blood. So the stage is being set for still more turmoil to come. And what about the management team and culture that Burns personally assembled?
It is becoming an endless line of falling dominos. One bad move leads to another, and another. One would think that investors clearly have limited stomachs for any more drama, yet that is what looks to be the Lordstown story moving forward.