Shares of Lordstown Motors electric vehicles fell as much as 12% in intraday trading on Thursday morning after the company confirmed that the U.S. Securities and Exchange Commission had requested information on a short seller’s claims that misled investors. .
Hindenburg Research accused Lordstown in a report last week of using “false” orders to raise capital for its first product, an all-electric van called Endurance. The short seller claimed that the lift was a few years away from production, however Lordstown claims that it is about to start producing the vehicle in September.
Lordstown CEO Steve Burns declined to comment on the SEC’s investigation to CNBC on Thursday morning. He told investors on Wednesday during the company’s first earnings call as a public company that it was “cooperating” with federal officials.
Burns said the company’s highly regarded pre-orders for more than 100,000 pickups – a key target of the Hindenburg report – were intended simply to assess customer interest, not to confirm future sales. Previously, the company classified the pre-orders as “non-binding production reservations”, but Burns also mentioned them as “very serious orders”.
“I’ve always been very clear, haven’t I? These are just what they’re meant to be. These are non-binding letters of intent. They’re called real-world pre-orders,” he told CNBC’s Squawk Box on Thursday. He later added: “I don’t think anyone thought we had effective orders, do I? It’s not just the nature of this business. “
Shares of Lordstown have fallen by about 24% since Hindenburg released the report on Friday. The stock fell about 10% during intraday trading on Thursday morning. The company’s market cap is $ 2.3 billion.
On Wednesday, the company stepped up its capital and operating spending guidelines for this year, citing largely decisions to accelerate the development of its second product (a utility vehicle) and do more in domestic production.
Lordstown went public through a special purpose procurement company, or SPAC, in October. They are among a growing group of electric vehicle start-ups that are public through transactions with SPACs, which have become a popular way to raise money on Wall Street because they have a more streamlined regulatory process than offers. traditional initial public.
Hindenburg’s report on Lordstown comes about six months after he launched a harsh report on another EV-SPAC Nikola start-up. This report also led to federal investigations, as well as the resignation of the company’s founder and president, Trevor Milton.
Short selling is when investors, mainly professional hedge fund managers, borrow shares of a stock from a broker and sell them in hopes of buying them cheaper. If the stock falls, investors get a profit from the difference when they return the broker’s shares.