Hindenburg Analysis, the short-seller agency whose report on Nikola Motor led to an SEC investigation and the resignation of its founder, is concentrating on one other electrical automobile firm. This time it’s Lordstown Motors, the Ohio electrical automaker that went public after merging with special-purpose acquisition firm DiamondPeak Holdings Corp., with a market worth of $1.6 billion.
Hindenburg stated in a report Friday that it has taken a brief place on Lordstown Motors, inflicting shares to plummet 21%. Shares have recovered barely and at the moment are down about 15% from the day gone by’s commerce. Hindenburg’s brief place relies on an organization that it says has “no income and no sellable product, which we imagine has misled traders on each its demand and manufacturing capabilities.”
In a report issued Friday, Hindenburg disputes that the corporate has booked 100,000 pre-orders for its electrical pickup truck, a stat shared by Lordstown Motors in January. The brief vendor says that “in depth analysis reveals that the corporate’s orders seem largely fictitious and used as a prop to boost capital and confer legitimacy.” The agency goes additional and alleges that Lordstown founder and CEO Steve Burns paid consultants for each truck pre-order as early as 2016 whereas he was main Workhorse.
The report additionally offers photographs and a 911 name of an incident in January when a Lordstown prototype automobile burst into flames throughout a take a look at drive.
Replace: A Lordstown Motors spokesperson responded to TechCrunch on Friday afternoon. “We shall be sharing a full and thorough assertion within the coming days, and after we do we are going to completely be refuting the Hindenburg Analysis report,” the spokesperson stated in an emailed assertion.
In feedback to the Wall Road Journal, Burns stated the report contained “half-truths and lies” and that it was an try by Hindenburg to harm its inventory forward of its first quarterly earnings report as a publicly traded firm.
The startup is known as for the Ohio city the place the corporate bought a dormant former Basic Motors Co. meeting plant in 2019. On account of that deal, GM acquired a small stake in Lordstown Motors.
Lordstown has an fascinating historical past for firm that’s lower than two years outdated. Lordstown Motors is an offshoot of Burns’ different firm, Workhorse Group, a battery-electric transportation know-how firm that can also be publicly traded. Workhorse holds a ten% stake in Lordstown Motors.
Workhorse is itself a small firm that was based in 1998 and has struggled financially at numerous factors in its lifetime. Most lately, Workhorse misplaced a bid to change into the provider of electrical autos to the U.S. Postal Service, which triggered shares to fall practically 15% within the days following the information. Workhorse shares at the moment are hovering round $16.58, down 60% from its file value of $42.96 reached February 4.
Lordstown Motors acquired a 6.2 million-square-foot manufacturing unit from GM in 2019. The corporate has stated it plans to supply 20,000 electrical industrial vehicles yearly, beginning in 2021, on the former GM Meeting Plant in Lordstown, Ohio.
Lordstown revealed its Endurance electrical pickup in a splashy and political-leaning ceremony in June 2020. On the time, the corporate didn’t present particulars on the inside, efficiency or battery of its deliberate electrical pickup truck. Your entire second half of the occasion took a 90-degree flip away from the truck and centered on its particular visitor, former Vice President Mike Pence, who spoke for 25 minutes about former President Trump’s insurance policies on jobs and manufacturing, China and the COVID-19 response.
Regardless of these lack of particulars, Burns advised the group in June that it had obtained 20,000 pre-orders. That will imply your entire first yr of manufacturing could be locked in if each buyer who pre-ordered the truck adopted by means of and purchased the automobile. Lordstown Motors stated, on the time, that a variety of potential clients had despatched letters of intent, together with AutoFlexFleet, Clear Fuels Ohio, Duke Power, FirstEnergy, GridX, Holman Enterprises and ARI, Summit Petroleum, Turner Mining Group and Valor Holdings, in addition to a number of Ohio municipalities.
Burns later stated pre-orders had reached 100,000. Hindenburg disputes these claims.
From the Hindenburg report:
Our analysis has revealed that Lordstown’s order guide consists of pretend or fully non-binding orders, from clients that typically don’t even have fleets of autos. In keeping with former workers and enterprise companions, CEO Steve Burns sought to guide orders, no matter high quality, purely as a software to boost capital and confer legitimacy. As well as, we present how, in desperation to assert there was demand for the proposed automobile, he paid for patrons to guide worthless, non-binding pre-orders.
We element conversations with Lordstown “clients” who have been keen to elucidate that the letters of intent (“LOI”s) with the corporate have been “promotional”. Others assured us they have been “not dedicated to something” and that the pre-order dedication measurement recorded by Lordstown was “completely inconceivable”. One CEO at a ‘key’ buyer advised us our outreach was the primary he had heard of any association with Lordstown.
Burns did verify to the WSJ that Lordstown paid consultants to generate preorders that have been understood to be nonbinding. He defined that this was to “assess market demand.” Burns denied that the follow misrepresented the corporate’s preorder guide.