The investment company Hindenburg Research scrutinizes listed companies. The newest destination: the US startup Lordstown Motors. The results of the research bring personnel consequences and the pickup producers into difficulties.
A bunch of allegations and an increasingly tight market environment are troubling the US startup Lordstown Motors. An investment firm has revealed that it has deceived investors and investors. In addition, the flagship of the future manufacturer is said to be much further away from series production than announced. As a result, the founder and CEO Steve Burns and his chief financial officer Julio Rodriguez left their posts. The founding daughter Brittney Burns also had to take her hat off as head of marketing. Her father is said to have been fired from his previous employer for similar reasons. But the departures are probably only the first consequences of the scandal. Other business transactions also speak against a positive perspective. At the same time, the market opportunities for the only product, the Pickup Endurance, are also falling.
The investment company Hindenburg Research has set itself the task of scrutinizing listed companies. If it finds wrongdoing by companies, it makes money by betting on their decline. A corresponding analysis of the truck startup Nikola caused a sensation last year: the founder Trevor Milton had set up a fraud system and cheated investors. Nikola admitted that at a presentation they just let a prototype roll down a mountain because it didn’t have a working drive. Trevor had to leave, virtually all partnerships with other corporations collapsed, the pickup plans were discontinued, Nikola tried to reinvent himself. Now Hindenburg devoted himself to the start-up Lordstown.
The former Tesla competitor has already admitted the central allegation: The number of pre-orders for its vehicles was not correct. The exchange supervisory authority is currently investigating this process. Lordstown originally said it had 100,000 reservations. Hindenburg said: “Our discussions with former employees, business partners, and a comprehensive check of documents show that the company’s orders are largely fictitious and serve as a support for raising capital and lending legitimacy.” who received money from Lordstown for their order. Entire orders have been falsified. “Many of the alleged customers neither operate fleets nor do they have the means actually make the specified purchases, ”writes Hindenburg Research. After an exam new leadership contradicts the details, but admits that unsafe orders were included. Many are said to come from “so-called influencers”. They would have made it obligatory to pre-order without intending to buy the trucks.
Hindenburg also stated that the company was three or four years away from series production. It is said that prototypes of the Endurance pickup went up in flames after ten minutes this January. Lordstown actually wanted to start mass production of the SUV this September. There is currently the talk of deliveries at the end of 2022. The company is named after the location of a former GM factory where the cars were supposed to roll off the assembly line. There was talk of 5,000 workers who would assemble 60,000 vehicles a year. Lordstown had raised both hefty subsidies and investor funds of an estimated 675 million US dollars through a Spac IPO.
Hindenburg mentioned further indications that the analysts believe that the project will end soon. For one thing, many executives sold their shares immediately after the IPO. On the other hand, Trevor Milton had already been confronted with similar allegations at his previous employer, the commercial vehicle manufacturer Workhorse. In March, the AP agency reported that Lordstown Motors had failed to pay a tax due. It was the property tax – around 492,000 euros. Lordstown announced that it had been an administrative error and that the debt would be paid immediately, including penalty interest of ten percent. Lordstown CEO Steve Burns (right) was celebrated by ex-President Donald Trump for the plans with the electric pickup Endurance (in the background). Today both are no longer in office. (Photo: White House / Shealah Craighead)
The troubled company’s last quarterly report shows a loss of $ 125 million. But it still seems to have enough reserves from the million-dollar IPO to pay the former boss a hefty severance payment of $ 750,000. CFO Rodiguez will also receive $ 200,000. There are also stock options. The owners won’t have much fun with them, the price has fallen to a third since its 52-week high – and continues to fall. Becky Roof, a manager from Alixpartners, takes over the position of CFO. The consultancy specializes in rescuing unstable companies. Together with interim CEO Angela Strand and President Rich Schmidt, they have now canceled the full-bodied promises of a van and a mobile home and concentrate fully on the series production of the pickup.
The last documents that Lordstown has filed with the Securities and Exchange Commission, however, draw a bleak future for endurance. The new management states that they do not have the necessary funds for the production of the car. In addition, changes to the SEC’s report state that Lordstown may no longer exist as a “continuing operation” in a year’s time. This assessment is not far away: who still wants to give them a hand with the production costs ?! For main partner GM, the commitment after Nikola was the second supported electric car startup to fail. After the downturn, little can be expected from investors. Several shareholders have filed lawsuits.
Apart from that, the vehicle is no longer as competitive as it was before. Tesla has already paid a competitive price of $ 40,000 for its pickup Cybertruck and has recently promised extensive improvements. Rivian is also sticking to ambitious pickup plans at a similar price. A few weeks ago, the all-electric Ford F150 caused a sensation: It is also said to be available for around $ 40,000 and has impressive data on paper. However, the Lordstown Endurance pickup is said to cost $ 52,500 and has hardly any unique selling points. Neither its range nor further innovations seem to justify the high price. The pickup market is very important for the USA – and an interesting test field for electromobility. Whether the Endurance, if it ever comes out, can be that is in the stars.