Lordstown Shares Plunge On Reports DOJ Is Probing The Company
Lordstown Motors were briefly halted after cratering on news that the Department of Justice is probing the company, according to Dow Jones. Shares tanked around 1130 EST on the news and were halted.
The probe shouldn’t come as a surprise to those who have been following the Lordstown saga. Recall, the company was caught lying about its “binding” orders (again) just hours after its CEO Steve Burns resigned after allegations of same in mid-June.
In mid-June Lordstown was forced to correct itself in a filing with the Securities and Exchange Commission about statements its President made the day prior. Tucked into a Form 8-K that looked as though it was just to accompany the announcement of the hiring of a new VP of Global Commercial Operations, the company admitted statements its President made earlier in the week (and that boosted the stock) were inaccurate:
To clarify recent remarks by company executives at the Automotive Press Association online media event on June 15, although these vehicle purchase agreements provide us with a significant indicator of demand for the Endurance, these agreements do not represent binding purchase orders or other firm purchase commitments. As previously disclosed in our Form 10-K/A for the year ended December 31, 2020, filed with the Securities and Exchange Commission on June 8, 2021, to date, we have engaged in limited marketing activities and we have no binding purchase orders or commitments from customers.
Recall, just one day prior to the comments, Lordstown’s CEO Steve Burns had resigned, along with the company’s CFO, following the results of an internal investigation catalyzed by allegations by short seller Hindenburg Research back in May.
In a PR called “Lordstown Motors Announces Leadership Transition” that same week, the company said the executive shuffle was due to a “transition from the R&D and early production phase to the commercial production phase of its business.” But in a separate PR called “Lordstown Motors Reports Results Of Special Committee Investigation Of Hindenburg Research Report”, the company released the findings of Sullivan & Cromwell LLP, who was tasked with looking in Hindenburg’s allegations.
“The Special Committee’s investigation concluded that the Hindenburg Report is, in significant respects, false and misleading,” the PR reads, before admitting: “The investigation did, however, identify issues regarding the accuracy of certain statements regarding the Company’s pre-orders,” the PR reads.
“Lordstown Motors made periodic disclosures regarding pre-orders which were, in certain respects, inaccurate,” the PR read.
First, the company admitted that some of its pre-orders were to “influencers”.
“Lordstown Motors has stated on several occasions that its pre-orders were from, or “primarily” from commercial fleets. In fact, many pre-orders were obtained from (i) fleet management companies or other end users that indicated interest in purchasing Endurance trucks, similar to commercial fleets, and (ii) so-called “influencers” or other potential strategic partners that committed to attempt to secure pre-orders from other entities, but did not intend to purchase Endurance trucks directly.
And also stated that “One entity that provided a large number of pre-orders does not appear to have the resources to complete large purchases of trucks. Other entities provided commitments that appear too vague or infirm to be appropriately included in the total number of pre-orders disclosed.”
Recall, Lordstown was the target of short seller Hindenburg Research back in May of this year, who released a report called “The Lordstown Motors Mirage: Fake Orders, Undisclosed Production Hurdles, And A Prototype Inferno”.
Fri, 07/02/2021 – 11:38