Short Seller Hindenburg Research Objectives EV Startup Lordstown Motors; Shares fall by 16%

The startup was named after the city of Ohio where the company bought a dormant former General Motors Co.

assembly plant in 2019. As a result of the agreement, GM acquired a small stake in Lordstown Motors. A GM spokesman declined to comment immediately.

The Wall Street Journal could not independently confirm the allegations in Hindenburg’s report.

Shares of the company in Ohio fell by 16% after the report was released Friday morning. Hindenburg – which last year targeted a new electric truck, Nikola Corp.

In his latest report, it is announced that he holds a short position in Lordstown Motors, which means that he can benefit from declines in the share price of the company.

The Hindenburg report describes Lordstown Motors’ order book as an ‘aerial image’, with accusations being made that it had paid an external consultation group to carry out pre-orders for its truck before its 2020 deal was announced. the firm said it was with former employees and business partners.

Mr. Burns confirmed that the company paid consultants to generate pre-orders that are considered binding as a way to assess market demand, but denies misrepresenting its pre-order book.

“We are not saying these are orders and have never declared them,” he said.

Lordstown Motors is a number of new clean transport companies that have become famous in recent years amid the growing interest of investors in electric vehicles. The company was listed last year through an agreement with special acquisition company, or SPAC, DiamondPeak Holdings Corp, which valued the company at $ 1.6 billion.

The company, which had a market value of $ 2.9 billion as of Thursday, has not yet sold a vehicle. It is aimed at the commercial truck market, vehicles commonly used by fleet operators in business or government institutions.

Lordstown Motors and Mr. Burns regularly pointed to their pre-order book to highlight the strong demand for its upcoming commercial pickup, the Endurance, and to promote its business among investors. “Most of them are signed by the CEOs of these large companies,” he said. Burns said in November during a CNBC interview about the pre-orders. “These are very serious orders.”

In a regulatory announcement in December, Lordstown Motors said it has no current customers or orders, and that there is no assurance that the non-binding pre-orders will be converted to sales. In a news release in January, Lordstown Motors said the more than 100,000 bookings for its Endurance truck are not binding.

Hindenburg said the orders were not only non-binding but also ‘largely fictitious’ and that they were not ‘true question’. The research firm in New York, led by Nathan Anderson, said he had spoken to several businesses and municipalities that the company reckons it had placed pre-orders.

Some pre-orders for 1,000 or more trucks come from businesses that did not operate a commercial fleet, Hindenburg said. Others with pre-orders told the firm they did not have the means or intent to purchase the number of trucks linked to the booking, the report said.

In response to these allegations, Mr. Burns said the company is confident that demand for its trucks exists, and that pre-orders are a way to measure interest, as it benefits the factory to build for certain volumes. He also said that some of these businesses are not fleet operators but intermediaries.

“If a man signed a piece of paper with the words ‘I think I can move x-thousand of them,’ we believe them. But it’s not in blood. This is a non-binding intention, ‘he said.

The report also said that Lordstown Motors was behind the plan to start production at the Ohio plant in September, and that it was not disclosed with delays in production. It is said that former employees told Hindenburg that the start-up is still building battery packs by hand, despite plans to manufacture them themselves.

Mr Burns said Lordstown Motors is still on track to start building market-ready trucks in September, and much of the equipment needed to manufacture the batteries has been installed.

Hindenburg also said a prototype of the new Lordstown Motors truck was set on fire ten minutes into the first test in January. The firm cited a police report he obtained through public records requests. Mr. Burns confirmed the fire but said it was determined it was caused by human error during the meeting.

Lordstown Motors initially outlined plans to start by the end of 2020. The company later pushed back the timing to January 2021, citing disruption of the Covid-19 pandemic, and recently pushed back production to September.

In January, Lordstown Motors said it had begun building 57 prototype trucks for testing. It is also said that he is working on an electric van that will be in production in the second half of 2022.

Lordstown Motors is expected to report its financial results in the fourth quarter and hold its first investor summit on Wednesday.

Hinderson, mr. Anderson, and a reporter for The Wall Street Journal are among the more than 20 defendants in a lawsuit by private equity firm Catalyst Capital Group and Callidus Capital Corp. A representative of the Journal said the news organization is confident in the fairness and accuracy of its reporting. Mr. Anderson said: “We stand 100% in our research on the topics.”

Hindenburg last autumn issued a report on Nikola accusing the manufacturer of electric and hydrogen-powered trucks of being a “complex fraud” and making misleading statements. Following the report, Nikola’s stock, the company received subpoenas from the Securities and Exchange Commission and the Department of Justice, and its founder, Trevor Milton, left the company.

Nikola called the allegations of the report false and misleading. A recent submission of regulations states that an internal review of Hindenburg’s allegations found that nine statements by the company or Mr. Milton was completely or partially inaccurate, but disputed that the report was described as a fraud.

Lordstown Motors acquired the plant from GM in November 2019 for $ 20 million, according to a regulatory filing. GM later forgave the purchase obligation, other loans and interest in exchange for 7.5 million shares of Lordstown Motors, or a 4.5% stake, the application reads.

Write to Ben Foldy at [email protected] and Mike Colias at [email protected]