Shares of Lordstown Motors Corp. fell nearly 20% on Friday after short seller Hindenburg Research released a report on the electric truck maker, accusing it of misleading investors and being a “mirage.”
Lordstown RIDE has misled investors “both in its demand and in its production capabilities,” Hindenburg said, citing conversations with former employees, business partners and documents showing “fictitious orders” and others that were non-binding agreements.
The report also cited an anonymous former employee who said delays and design modifications are putting vehicles Lordstown promised to produce by September for at least three to four years out of production. A recent road test ended with the vehicle on fire, he said.
Lordstown did not immediately return a request for comment. The five analysts covering the stocks and surveyed by FactSet forecast a series of quarterly losses for the company and sales of around $ 114 million for the fourth quarter. Three of the five analysts rate the action as a buy, and the other two split between selling and holding calls.
Hindenburg in September pointed to electric truck maker Nikola Corp. NKLA,
calling it “an intricate fraud”, which the company contested.
Lordstown Motors went public in October through a reverse merger with a blank check company.
Its Ohio plant belonged to General Motors Co. GM,
making compact cars for the legacy automaker, and was slated to shut down as part of GM’s focus on more popular and profitable trucks and SUVs. It was later sold to Lordstown Motors.
In January, the company said it had more than 100,000 orders for its electric truck. Later that month, it said it was “on track” to begin production of the truck, called Endurance, this year, with prototypes to be delivered “in the next few weeks.”
The shares have nearly doubled since the company went public. They have lost 27% this year, in contrast to gains of around 5% for the S&P 500 index. SPX,