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Electric truck start Lordstown Motors Corporation (NASDAQ: RIDE) angrily disputed a report by Hindenburg Research that accuses the company of fraudulently marketing itself.
What happened: Hindenburg’s report ‘The Mirage’ of Lordstown Motors: Fake Orders, Undisclosed Production Barriers and a Hell’s Prototype, ‘details an investigation into how the company promotes itself and its reputation. Endurance electric truck.
“Lordstown is a PSPC EV with no revenue and no salable product, which we believe has misled investors both about its demand and its production capabilities,” said Hindenburg, saying the company was “referring to its notebook 100,000 pre-orders as proof of claim for its proposed EV truck. Our extensive research reveals that corporate orders appear largely fictitious and used as a prop to raise capital and confer legitimacy.
The Hindenburg report added that Lordstown paid consultants to generate pre-orders ahead of its IPO last October, adding that former Lordstown employees described the company’s founder and CEO, Steve Burns, as a “con artist. Or a character from “PT Barnum”.
In an interview with the Wall Street Journal, Burns admitted to hiring consultants to generate pre-orders, but said it was done to gauge market demand. He told the publication that the pre-order book was never misrepresented.
“We are not declaring that these are orders and we have never declared that,” he said.
The Journal also pointed out that Lordstown Motors said it had no customers or pending orders in a December regulatory filing, noting that there was no guarantee that non-binding pre-orders would turn into sales.
In a January press release, Lordstown Motors said the more than 100,000 reservations it had made for its Endurance truck were non-binding.
Burns told the Journal that some of the companies making preorders weren’t fleet operators, but their middlemen.
“If a guy signed a piece of paper that said, ‘I think I can move x thousand,’ we believe them,” he said. “But it’s not in the blood. It is a non-binding letter of intent. “
What else happened: The Hindenburg report also said that Lordstown Motors would have signed a $ 735 million deal for 14,000 trucks with E Squared Energy, which Hindenburg says “is based in a small residential apartment in Texas that does not operate a fleet of vehicles ”.
Tim Grosse, CEO of Texas-based E Squared Energy, came to the defense of Lordstown Motors.
The Hindenburg Report said Grosse responded to his inquiries about Lordstown Motors “with a more Alice-in-Wonderland response”, insisting that his pre-order was an “estimate” based on Lordstown’s planned production. rather than on customer demand.
“It’s based primarily on the Lordstown production,” Grosse said, according to the Hindenburg report. “The first year they will be somewhat limited with only 20,000 vehicles and we have 2,000 on the LOI and the second year we have 4,000 and production will be around 40,000. And the third year year, we go to 8,000… That’s what we estimate. “
Still, Grosse offered a dismal view of Hindenburg in an interview with the Business Journal in Youngstown, Ohio.
“I think it’s obvious what the report was intended to do,” he said, adding that his company planned to fill all orders for Lordship vehicles. “We are a legitimate service program. We buy vehicles for municipalities and customers who don’t have big budgets to switch to electric vehicles. “
RIDE price action: Lordstown Motors shares fell 16.54% on Friday, closing at $ 14.78.
Lordstown Motors CEO Steve Burns at a White House event in September 2020 with former President Donald Trump and the Endurance electric truck. Photo courtesy of Trump’s White House Archives.
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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