Lordstown Motors Stung By Short Seller’s Accusations Electric Truckmaker Misled Investors

Lordstown Motors Stung By Short Seller’s Accusations Electric Truckmaker Misled Investors


Lordstown Motors, an Ohio-based electric truck maker, is the latest startup targeted by short seller Hindenburg Research which accuses the company of misleading investors by exaggerating demand for its Endurance pickup and ability to build it. Shares of the Nasdaq-listed company dropped as much as 20% on Friday.

Hindenburg, which last year targeted hydrogen fuel cell truckmaker Nikola for exaggerations by founder Trevor Milton, said its review of Lordstown’s claim to have 100,000 pre-orders for its $52,500 Endurance electric truck are “largely fictitious and used as a prop to raise capital and confer legitimacy,” citing conversations with ex-Lordstown employees, businesses and a review of documents. Lordstown also isn’t likely to meet goals of beginning production by September or producing battery packs for its vehicles in-house and hasn’t completed validation testing required by the U.S. government, the report said. 

“Despite claims that Lordstown will be producing vehicles by September, a former employee explained how the company is experiencing delays and making `drastic’ design modifications, putting them an estimated 3-4 years away from production,” Hindenburg said. “Despite claims that battery packs would be manufactured in-house, we were told that the equipment is months away from arriving, let alone being put into a production environment. In the meantime, we were told that battery packs are being put together by hand.”

Spokespeople for Lordstown didn’t immediately respond to a request for comment.

The shares fell 16% to $14.80 in mid-day Nasdaq trading on Friday. 

Lordstown is part of a wave of electric vehicle startups raising billions of dollars with plans to go public via SPAC mergers that began in 2020, including Nikola, Proterra, Hyliion, Canoo, Workhorse, Fisker Inc., Xos Trucks, Faraday Future and Lucid Motors. While companies such as electric busmaker Proterra have been delivering vehicles for years or are about to begin production, such as Lucid, others appear to be at a much earlier stage of development. Shares of the vehicle startups and battery makers that have gone public, such as QuantumScape and Romeo Power, have lured investors looking for opportunities to ride a shift to cleantech that’s been led by Elon Musk’s Tesla. 

The company drew support from the Trump Administration with plans to give new life to General Motors’ former Lordstown Assembly plant, which it bought from the Detroit-based automaker in 2019 after GM closed it. (GM also invested $75 million in Lordstown Motors last year.) Former Vice President Mike Pence attended the startup’s unveiling of the Endurance in June 2020, when company CEO Steve Burns said it intended to get to market ahead of competitors. 

“Our goal is to be the first electric pick-up truck in the world,” he said at the company event. “We are going to beat everyone to market.” 

Hindenburg Research is a financial research firm run by Nate Anderson, a CFA, and says it specializes in forensic financial analysis. In the case of Nikola, Hindenburg’s allegations led to founder and executive chairman Milton’s resignation. The company has confirmed it’s under review by the Securities and Exchange Commission and U.S. Justice Department.

“We have incurred significant expenses as a result of the regulatory and legal matters relating to the Hindenburg article,” Nikola said in a February 25 SEC filing. In the filing, it also confirmed that some of the public statements attributed to Milton or the company were “inaccurate in whole or part when made.”

Since Lordstown’s public listing in October 2020, company executives and directors have sold about $28 million of stock, according to Hindenburg.

“We think it bodes poorly when executives unload stock in a company with no actual product that claims to be on the cusp of mass-production,” the report said. “We think investors, workers, and the local community deserve much more transparency on what is going on at Lordstown.”



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