The stock price of electric car maker Lordstown Motors is under pressure after the darling of the SPAC said that two of its executives suddenly resigned and the board of directors found evidence of inaccurate statements.
Lordstown Motors Corp. announced the sudden departure of two of its executives and stated that its board of directors found evidence of inaccurate statements, adding to the turmoil of the electric car manufacturer and the former SPAC star.
The company said in a statement on Monday that CEO Steve Burns and CFO Julio Rodriguez have resigned from the company with immediate effect. Burns declined to comment on his withdrawal in a text message.
This is the company’s latest setback. The company warned last week that if it fails to raise more funds, it may not have enough cash to fund the development of its first truck and may even survive the next 12 months. . In March of this year, after a short seller stated that its technology was flawed and its truck bookings were not binding, the startup disclosed an investigation by the US Securities and Exchange Commission on its business.
As of 9:32 am New York time, the company’s stock price fell 18% and fell 15% to $9.69. The stock has fallen about 52% this year.
Lordstown is one of many electric car startups that have gone public through mergers with so-called special purpose acquisition companies (SPACs). These companies have always been controversial because they created public companies from young companies, with little hindrance to revenue or business Viable products. It merged with DiamondPeak Holdings in October and netted Lordstown $675 million.
The company said in a separate statement that the board’s investigation concluded that it had made a misrepresentation of its vehicle reservations. The survey cited examples in which the startup falsely claimed that the booking came from a commercial fleet and not from a third-party management company or “influencers” who did not intend to directly purchase trucks.
It also found that some pre-orders were placed by buyers who were ostensibly unlikely to have the resources to complete the order or whose promises were “too vague or weak to be properly included in the total number of pre-orders disclosed”.
The board concluded that the other allegations made by the short seller Hindenburg Research in March were “false and misleading” in many respects.
Interim CEO appointment
The company’s lead independent director Angela Strand (Angela Strand) has been appointed as executive chairman, and she will oversee the company until a new CEO is determined. Becky Roof, who had previously served as interim treasurer at other companies, will hold the same position in Lordstown.
The short seller Hindenburg claimed that Burns was forced to leave his former company, Workhorse Group Inc., an electric truck manufacturer. He left the company in 2019 and founded Lordstown. Burns denied Hindenburg’s allegations.
Burns’ sudden departure and Lordstown’s discovery of misstatements during his tenure are strikingly similar to what happened to Nikola Corp., another electric car startup that went public through a blank check company. After Hindenburg targeted a company that misled investors, Nicholas’s founder and CEO also resigned, which the startup later confirmed.
Lordstown’s acquisition of a closed General Motors factory in Youngstown, Ohio, and plans to produce its own cars there, attracted attention. The move was praised by the administration of President Donald Trump, who had previously promised to restore work to thousands of workers who lost their jobs when the factory closed in 2019.
The departure of the two Lordstown executives comes at a time when the company is trying to transition from research and development to commercial production of its first model.
“We remain committed to achieving our production and commercialization goals, adhere to the highest operating and performance standards, and create value for shareholders,” Strand said in the statement.
(Update the opening stock in the fourth paragraph.)
– With the help of Anne Riley Moffat.