Lordstown Motors Stock Falls 10.8% After WSJ Reports DOJ Probe

LORDSTOWN, Ohio – Shares of Electric-vehicle manufacturer Lordstown Motors Corp. plummeted Friday after The Wall Street Journal reported the startup is under scrutiny by the U.S. Department of Justice.

The inquiry is in its early stages and is being handled by the U.S. Attorney’s office in Manhattan, the newspaper reported, citing unnamed sources familiar with the matter.

Shares of Lordstown Motors, which trades under the ticker symbol RIDE, fell sharply as investors digested the news. RIDE shares closed at $9.23, down 10.8% on Friday. Stock prices for the EV manufacturer are down 54.7% so far this year.

In February, the U.S. Securities and Exchange Commission launched an inquiry into the company’s affairs, particularly related to the EV automaker’s merger last year with blank-check company DiamondPeak Holdings Corp.  It also sought information about the company’s pre-orders for its all-electric Endurance pickup, which is under development at the former General Motors assembly plant in Lordstown.

Last month, the company said in a restated 2020 annual earnings report that the SEC had issued two subpoenas to access records.  That indicates the SEC had launched a formal investigation into the company.

“Lordstown Motors is committed to cooperating with any regulatory or governmental investigations and inquiries,” said Ryan Hallet, Lordstown Motors spokesman, in a two-sentence statement. “We look forward to closing this chapter so that our new leadership – and entire dedicated team – can focus solely on producing the first and best full-size all-electric pickup truck, the Lordstown Endurance.”

Today’s development is the latest in a string of bad news to hit Lordstown Motors. 

On June 14, the company announced its founder and CEO, Steve Burns, had resigned.  Also resigning was Chief Financial Officer Julio Rodriguez.

The executives resigned after an internal investigation determined that public statements made by executives regarding pre-orders for the Endurance were inaccurate. 

In March, short-seller Hindenburg Research published a report that alleged Lordstown Motors misled investors by claiming it had secured 100,000 pre-orders for the Endurance. The report said that those orders were largely fictitious. 

MORE: July 2021 Print Edition
Long, Bumpy Road for Lordstown Motors

Copyright 2021 The Business Journal, Youngstown, Ohio.