Short seller Hindenburg Research trained his rifles Lordstown Motors (RY) after targeting EV shares Nikola (NKLA) and Kandi Technologies (KNDI) and accuses the start-up of electric trucks of misleading investors with false orders.
Lordstown has misled investors about both demand and production capacity, Hindenburg said in a report published Friday.
“Our discussions with former employees, business partners and an extensive document review show that the company’s orders are largely fictitious and are used as a tool to raise capital and provide legitimacy,” the short seller said.
In January, Lordstown, Ohio, demanded more than 100,000 pre-orders from fleet operators for its proposed electric truck. It offers a 250-mile range for Lordstown Endurance and says it’s on track to start manufacturing the EV in September.
However, former employees estimate that the electric truck is ‘3-4 years away from production, if it ever gets there’, Hindenburg said in his scathing report. The EV “burned spontaneously” in its very first road test, he claims.
Lordstown did not immediately respond to a request for comment. Like many new EV shares, it has a business plan but no revenue yet. The company acquired an old GM plant in Lordstown, Ohio, in November 2019. The Endurance trucks cost $ 45,000 after federal EV rebates.
But it will enter a very controversial market. Over the next one to three years, General Motors (GM), Ford (F) and Tesla (TSLA) plans to bring electric pickups to market for the first time. So do EV startups Rivian, backed by Amazon (AMZN), and Kanoo (GOEV).
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RIDE Stock, EV shares
Lordstown shares fell 17% to 14.76 in the stock market. RIDE shares further disrupted the 40-week line after falling below the 10-week line in late February, according to the MarketSmith chart analysis.
Among other EV shares, Nikola shares lost 3.5% and Kandi shook off 2.1%, with both EV shares also below their 10- and 40-week weeks. Tesla fell by 68%.
Hindenburg accused Nikola of an “ocean” of lies in September last year. The short seller targeted China’s Kandi last November, claiming it made sales.
The short seller’s damning Nikola report led to the unraveling of a manufacturing agreement with GM. This ended Nikola’s hopes of producing the Badger pickup electric truck.
Both companies have refuted the allegations.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
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