Lordstown Motors bought a car manufacturing factory from General Motors last year in November. The Ohio-based plant would be the electric vehicle (EV) startup’s home for its battery-powered Endurance pick-up. Following a short-seller report that the company is overhyping its pre-orders to trick fundraisers, financial regulators are seeking information from the firm.
Hindenburg Research, a trusted short seller who uncovered Nikola Motor’s fraud leading to its executive’s resignation, has revealed that Lordstown Motors is lying about the 100,000 pre-orders on the Endurance truck. The short seller reported the pre-orders were “largely made up and utilized as a ruse to collect funds and achieve credibility.”
The automaker recently went public after merging with Diamond Peak Holdings Corporation, a special purpose acquisition company (SPAC), in a deal valued at $1.6 billion. After Hindenburg Research took a short position in the firm, its shares dropped to 21%.
The short seller took the position on behalf of a company with “no revenue and no sellable product, which we believe has misled investors on both its demand and production capabilities.” According to the report, companies with no commercial address made pre-orders worth tens of millions of dollars.
The firm responded to the claims saying it was cooperating with the Securities and Exchange Commission (SEC) in the inquiry. Lordstown founder and CEO Steve Burns said the company’s board “has formed a special committee to review these matters.”
General Motors sold the Ohio factory to Lordstown Motors on a $40 million loan and owned shares worth $75 million in the company. The startup, named after the local town where it is situated, pledged to offer employment to about four hundred locals.
Lordstown said the report contained half-truths and lies, and Hindenburg planned to taint the carmaker’s name ahead of its first quarterly earnings report as a public company. Burns said the company was on track to mass-produce the Endurance fleet as planned.
“There is no company on Planet Earth six months away from entering into mass production, not hand building, of a full-size pick-up truck. We have a product people want, and we want to get as many into the market as we can,” he said.
Hindenburg’s report also revealed how the carmaker hired a consultancy firm to rack up its pre-orders. “In addition, we show how, in desperation to claim there was a demand for the proposed vehicle, he paid for customers to book valueless, non-binding pre-orders.”
The report further disclosed two companies listed in the pre-orders list “lacked funds or intention to follow through.” For instance, E Squared Energy Advisors, one of the companies, is headquartered in a Texas residential apartment. Another firm, Innervations, pre-ordered about 1000 pick-up trucks they have no intention of buying.https://zolalnews.com/