Electric truck starts Lordstown Motors Corporation (NASDAQ: RIDE) has furiously disputed a report by Hindenburg Research accusing the company of fraudulently marketing itself.
What happened: Hindenburg’s report “The Lordstown Motors ‘Mirage’: Fake Orders, Undisclosed Production Hurdles, And A Prototype Inferno,” contains an investigation into how the company promotes itself and its Endurance electric truck.
“Lordstown is an EV-SPAC with no revenue and no salable product, which we believe has deceived investors in a big way regarding its demand and production capacity,” Hindenburg said, claiming that the company “on its book of “100 000 pre-orders showed proof of demand for its proposed EV truck. Our extensive research shows that the company’s orders are largely fictitious and are used as a prop to raise capital and give legitimacy.”
The Hindenburg report added that Lordstown consultants paid to generate pre-orders before its initial public offering last October, adding that former Lordstown employees Steve Burns, founder and CEO of the company, as a ‘fraudster’ or a PT Barnum ‘figure described.
In an interview with the Wall Street Journal, Burns admitted that he employs consultants to generate pre-orders, but said this was done to assess market demand. He told the publication that the pre-order book was never misrepresented.
“We are not saying these are orders and have never declared them,” he said.
The Journal also stressed that Lordstown Motors said they had no customers or orders pending a regulatory filing in December, noting that there was no assurance that the non-binding pre-orders would go on sale.
In a news release in January, Lordstown Motors said the more than 100,000 bookings it had made for its Endurance truck were not binding.
Burns told the Journal that some companies that placed pre-orders were not fleet operators, but their intermediaries.
“If a man signed a paper with the words’ I think I can move x-thousand of them, ‘we believe them,'” he said. “But it’s not in blood. This is an unconnected intention. ‘
What else happened: The Hindenburg report also states that Lordstown Motors allegedly colored a $ 735 million agreement for 14,000 trucks with E Squared Energy, which according to Hindenburg ‘is based on a small apartment in Texas that does not operate a vehicle fleet not.’
Tim Grosse, CEO of E Squared Energy in Texas, put Lordstown Motors to the defense.
According to the Hindenburg report, Grosse responded to his inquiries about Lordstown Motors ‘with a rather Alice-In-Wonderland response’, insisting that the pre-order was an ‘estimate’ based on Lordstown’s planned production rather than the customer’s question.
“It is mainly based on the production of Lordstown,” Grosse said according to the Hindenburg report. ‘In the first year they will limit only 20,000 vehicles, and we have 2,000 in the LOI and the second year we have 4,000 and the production will be about 40,000. And the third year we rise to 8,000 … That’s what we estimate. ‘
Yet in an interview with the Business Journal of Youngstown, Ohio, Grosse offered a sad look at Hindenburg.
“I think it’s obvious what the report was intended for,” he said, adding that his company plans to complete all orders for Lordship vehicles. “We are a legitimate service program. We buy vehicles for municipalities and customers who do not have large budgets, to switch to EVs. ”
RIDE price action: Lordstown Motors shares lost 16.54% on Friday, closing at $ 14.78.
Lord Burton’s CEO Steve Burns during a White House event in September 2020 with former President Donald Trump and the Endurance electric truck. Photo courtesy of the Trump White House Archives.
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