Source Cited in Hindenburg Research Report Refutes Its Claims

YOUNGSTOWN, Ohio – The CEO of a company named as a source in a short-seller’s report alleging Lordstown Motors Corp. has misled investors says its findings are false.

“I think it’s obvious what the report was intended to do,” says Tim Grosse, CEO of Texas-based E Squared Energy, a company that was singled out in a scathing report issued March 12 by Hindenburg Research.

Short sellers realize profits when a stock drops in value, which is what Grosse suspects is behind the Hindenburg report. Shares of Lordstown Motors plummeted more than 19% in the hours after the report was released.

The report says Lordstown Motors’ proclamations that it has obtained more than 100,000 “serious orders” of its all-electric Endurance pickup truck “appear to be fictitious,” consisting of an order book made up of “fake and entirely non-binding orders, from customers that generally do not even have fleets of vehicles.”

Hindenburg Research, a financial research firm renown for taking short positions on stocks, alleges the company has misled investors through public statements related to demand and production.

“Lordstown is an electric vehicle SPAC with no revenue and no sellable product, which we believe has misled investors on both its demand and production capabilities,” Hindenburg said.

The company went public in October under the ticker RIDE after merging with DiamondPeak Holdings Corp., a specials purpose acquisition company, or SPAC.

Lordstown Motors is in the process of conducting beta testing on its all-electric pickup, The Endurance. It plans to start full production in September at the former General Motors Lordstown plant, which it purchased.

The Hindenburg report examined customer agreements, spoke with customers, and interviewed former business associates and employees.

“Our conversations with former employees, business partners and an extensive document review show that the company’s orders are largely fictitious and used as a prop to raise capital and confer legitimacy,” the report said.

The report, titled “The Lordstown Motors Mirage: Fake Orders, Undisclosed Production Hurdles, and a Prototype Inferno,” alleges that Climb2Glory, a consulting group, was “paid to generate pre-orders.”

One of the customer companies the report cited was E Squared. According to Hindenburg, the company is based out of a small residential apartment in Texas that doesn’t operate a vehicle fleet. Lordstown Motors has said the company placed a pre-order for 14,000 trucks.

But E Squared’s Grosse says his company is a service that contracts with fleet customers, and says it plans to fill all of the orders for Endurance pickup trucks.

“We’re a legitimate service program,” he says. “We buy vehicles for municipalities and customers who don’t have large budgets to switch to EVs.”

The research firm also said its spoke with the owner of a two-person startup that operates out of Regus virtual office, with a mailing address at a UPS Store, that allegedly pre-ordered 1,000 trucks. The owner told Hindenburg it does not intend to order any vehicles and the pre-order is a mere marketing relationship.

Another company representative that said it would purchase 40 vehicles through Climb2Glory told Hindenburg: “I’m not committed to anything, not to buying a single vehicle. I committed to consider buying vehicles. I’d have a lot of questions before I commit to anything.”

Hindenburg also reached out to former employees and business associates of Lordstown CEO Steve Burns – one of whom described him as a “P.T. Barnum” of the industry.

Late Friday, Lordstown Motors issued a brief statement: “We will be sharing a full and thorough statement in the coming days, and when we do, we will absolutely be refuting the Hindenburg Research report,” a spokesman said.

Hindenburg Research last year released a report that targeted EV automaker Nikola as an “intricate fraud built on dozens of lies.” The report triggered an inquiry by the U.S. Securities and Exchange Commission.

Nikola’s founder and former CEO, Trevor Milton, was forced to resign. Nikola has since admitted Milton made inaccurate statements that misled investors between 2016 and 2020.

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