Lordstown Motors Shares Slip After Disclosure of SEC Inquiry

LORDSTOWN, Ohio – Shares of Lordstown Motors Corp. dropped nearly 14% Thursday, the day after its CEO disclosed that the Securities and Exchange Commission has begun an inquiry into the company.

Steve Burns told analysts during a conference call Wednesday that the SEC has requested information from Lordstown Motors, a move likely spurred by a blistering short-seller’s report released a week ago that alleges the company has misled investors.

“We are aware of the short-seller’s report,” Burns told analysts Wednesday during the company’s first earnings call.  “We’ve also received a request for information from the SEC and we are cooperating with that inquiry. In addition, the board of directors has formed a special committee to review these matters.”

Shares fell to $13.01, down 13.78% from Wednesday’s close of $15.09 and off 59% from the stock’s 52-week high of $31.80.  

The report, issued by short-seller Hindenburg Research, described Lordstown Motors’ preorders for its all-electric Endurance pickup as “fictitious,” and alleged that the company hasn’t been forthcoming about production challenges.

Burns said he could not comment on the report until the committee has completed its review. During an interview with CNBC’s Phil LeBeau on “Squawk Box” Thursday morning, Burns said he could not address any “specifics of any SEC inquiry” after LeBeau asked him whether he had misled investors.

“We’ve been really up-front with our ramp-up to market,” Burns said. 

He added that the company has talked with third parties that have contacted fleets as well as making direct contact with fleet customers in order to gauge demand for the truck.  “We have got an unbelievable reception,” he said. 

Among the criticisms in the Hindenburg report was that Lordstown Motors paid third parties to drum up preorders that were “largely fictitious” and that these potential customers were unlikely to purchase the truck.

The company has reported that it has more than 100,000 preorders for the Endurance. 

Burns explained that these “preorders” are nonbinding letters of intent, noting “we’ve always classified them for that.” He said that the company has interest directly from fleets and from those that buy fleets for customers.

“We don’t even have a product yet, so by definition we can’t have orders,” Burns told LeBeau. “The preorders did exactly what they’re supposed to do: gauge interest. I don’t think anybody thought that we had actual orders. That’s just not the nature of this business.”

The Endurance is scheduled for production in late September, the company said Wednesday.  It will first be available for commercial fleets, then potentially for consumers. The truck is undergoing beta testing at Lordstown Motors’ plant, the former General Motors assembly complex. 

Lordstown Motors also said it is starting work on a second vehicle, an all-electric van that is planned for production during the second half of 2022.

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