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Lordstown Motors stock has dropped 17.47%, 8.23%, and 39.16% in the past 5-days, 1-month, and 3-months respectively according to market data provided by MarketWatch.
Lordstown Motors Corp (NASDAQ: RIDE) stock went down 18.84% on Monday, June 14, 2021, to end the day trading at $9.26 after its CEO Steve Burns and CFO Julio Rodriguez resigned. This happened after a special board committee affirmed claims of inaccuracies in pre-orders for its electric pickup truck dubbed Endurance.
Initially, the allegations were made by Hindenburg Research. The investment fund’s report claiming Lordstown’s pre-orders as “largely fictitious” and not representing “genuine demand” have caused huge dumping and price drop of shares. However, Lordstown dismissed their allegations as false and misleading.
The stock drop marks the biggest seen since the company’s IPO through a SPAC. It is also an added sore since stocks had initially dropped Monday after the company disclosed internal weaknesses which could have led to financial misstatements.
Lordstown Motors stock also crashed over 20% Wednesday following SEC inquiries over their SPAC merger and vehicle pre-orders. At the same time, the company cast doubt on its ability to stay in business until next year.
Moreover, a few weeks before this, Lordstown had called for more capital from investors in order to meet their already lowered production targets. The company reported that due to pandemic-related and industry-wide supply chain issues, its money-on-hand would be cut to $50-75 million down from the forecasted $200 million.
The exec positions will be taken up by Angela Strand as CEO until a permanent successor is found, and Becky Roof as interim CFO. Burns also stepped down from the company’s board and a replacement for him may be found as management becomes more solid.
Lordstown Motors Stock Upheaval
Lordstown Motors stock has dropped 17.47%, 8.23%, and 39.16% in the past 5-days, 1-month, and 3-months respectively according to market data provided by MarketWatch. Its YTD and 1-year performance were also -53.84% and -8.13% respectively. However, in the after-hours trading session today, Lordstown shares rose 0.76% to $9.33.
Investors have bated breaths on the potential for stock disposal from departing management, especially Burns who holds a 27% stake in the company. Should this happen, selling pressures would rise tremendously causing a further drop in stock price.
Moreover, the company may be immensely affected by changes effected by the new management. This may include massive revision costs should a decision be made to remodel the Endurance signature look. Another factor is whether the new exec team renames the whole management board due to the ‘mess’ that the previous one made.
To add to the disarray, Lordstown has come under intense scrutiny from regulators and short sellers on their ability to accomplish what they promised Wall Street.