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According to Hindenburg Research, Lordstown Motors has consistently pointed to 100,000 pre-orders for its proposed EV truck. However, in reality, the company does not have a sellable product at all.
The US electric vehicle producer Lordstown Motors Corp (NYSE: RIDE) seems to be in hot water following a report about its activity released by short-seller Hindenburg Research. According to Hindenburg Research, Lordstown Motors misled investors about its truck preorders and the production progress. The company took a short position in Lordstown Motors and found out the company was using “fake” orders to raise capital. Currently, Lordstown Motors has to answer questions from the US Securities and Exchange Commission (SEC).
On March 12, Hindenburg Research released a report explaining how the EV maker had been misleading investors on its demand and production capabilities. According to Hindenburg Research, Lordstown Motors has consistently pointed to 100,000 pre-orders for its proposed EV truck. However, in reality, the company does not have a sellable product at all. Hindenburg Research provided examples:
“For example, Lordstown recently announced a 14,000-truck deal from E Squared Energy, supposedly representing $735 million in sales. E Squared is based out of a small residential apartment in Texas that doesn’t operate a vehicle fleet.”
The company further said:
“Another 1,000-truck, $52.5 million order comes from a 2-person startup that operates out of a Regus virtual office with a mailing address at a UPS Store. We spoke with the owner who acknowledged it won’t actually order any vehicles, instead describing the “pre-order” as a mere marketing relationship.”
Following this report, Lordstown Motors has faced questions from SEC. In response, Lordstown Motors CEO Steve Burns said:
“We want to take a moment and acknowledge that we are aware of the short-seller’s report. That is all we can say, and we cannot comment on this during the Q&A period following this call, or any follow-up questions and conversations, until the special committee has finished its review.”
Lordstown Motors’ Q4 and Full 2020 Performance
Soon after the accusations from Hindenburg Research, Lordstown Motors released its Q4 and full 2020 financial results.
The company reported its full year 2020 net loss of $101 million and cash of $630 million. Further, it said that its warrant exercise in January this year brought an additional $82 million of cash.
In addition, Lordstown Motors commented on its controversial all-electric pickup truck. Its CEO Steve Burns stated:
“We are extremely excited and proud to be so close to delivering our first beta vehicles, which we believe should solidify and spur customer demand and commitments. Beta production reflects our innovative engineering, increasingly automated factory and unique hub wheel and battery pack capabilities”.
Before the middle of 2021, the company is planning to deliver beta versions of the vehicle.