Shares of electrical car start-up Lordstown Motors closed down 13.8% Thursday after the corporate confirmed the U.S. Securities and Exchange Commission has requested info concerning claims by a brief vendor that it misled buyers.
Hindenburg Research accused Lordstown in a report final week of using “fake” orders to boost capital for its first product, an all-electric pickup truck referred to as the Endurance. The brief vendor claimed the pickup was years away from manufacturing, nonetheless Lordstown maintains it is on monitor to start out producing the car in September.
Morgan Stanley in an investor be aware Thursday afternoon additionally lower its worth goal for Lordstown from $18 a share to $12. Analyst Adam Jonas cited elevated steerage on spending as a cause for the discount. He reiterated the agency’s underweight ranking on the inventory.
Lordstown CEO Steve Burns declined to touch upon the SEC inquiry Thursday morning on CNBC. He instructed buyers throughout the firm’s first earnings name as a public firm Wednesday that it was “cooperating” with federal officers.
Burns on Thursday mentioned the corporate’s extremely touted preorders of greater than 100,000 pickups — a foremost goal of the Hindenburg report — had been merely meant to gauge buyer curiosity, to not verify future gross sales. The firm beforehand categorized the preorders as “non-binding production reservations” as effectively, however Burns additionally has referred to them as “very serious orders.”
“We’ve always been very clear, right? These are just what they’re intended to be. These are non-binding, letters of intent. They’re called preorders out in the real world,” he mentioned Thursday on CNBC’s “Squawk Box.” He later added, “I don’t think anyone thought that we had actual orders, right? That’s just not the nature of this business.”
Shares of Lordstown have tumbled by about 27% since Hindenburg launched the report Friday. The firm’s market cap is $2.2 billion.
The firm on Wednesday additionally elevated its steerage on capital and operational bills for this 12 months, largely citing choices to speed up the event of its second product (a van) and do extra in-house manufacturing.
Lordstown went public by means of a particular function acquisition firm, or SPAC, in October. It is amongst a rising group of electrical car start-ups going public by means of offers with SPACs, which have change into a well-liked approach of elevating cash on Wall Street as a result of they’ve a extra streamlined regulatory course of than conventional preliminary public choices.
Hindenburg’s report on Lordstown comes about six months after it launched a scathing report concerning one other EV-SPAC start-up, Nikola. That report additionally led to federal inquires in addition to the resignation of the corporate’s founder and chairman, Trevor Milton.
Short promoting is when buyers, principally skilled hedge fund managers, borrow shares of a inventory from a dealer and promote them within the hope of shopping for them again cheaper. If the inventory drops, the buyers make a revenue off the distinction once they return the shares to the dealer.
— CNBC’s Michael Bloom contributed to this report.