Shares of Lordstown Motors electric vehicle start-ups fell to 12% during intraday trading on Thursday morning after the company confirmed that the U.S. Securities and Exchange Commission had requested information on the claims. of a short seller who deceived 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 the collection was years away from production, but Lordstown maintains it is on track to start producing the vehicle in September.
Lordstown CEO Steve Burns declined to comment on the SEC investigation Thursday morning on CNBC. He told investors Wednesday during the company’s first profit call as a public company that it “cooperated” with federal officials.
Burns said pre-orders of more than 100,000 collected from the company, a key target of the Hindenburg report, were the most popular for measuring customer interest and not for confirming future sales. Previously, the company classified pre-orders as “non-binding production reserves”, but Burns has also referred to them as “very serious orders”.
“We’ve always been very clear about that, haven’t we? That’s exactly what they’re meant to be. They’re non-binding letters of intent. They’re called real-world pre-orders,” CNBC’s Squawk Box said Thursday. he added, “I don’t think anyone thought we had real orders, right? It’s not just the nature of this business.”
Shares of Lordstown have fallen by about 24% since Hindenburg released the report on Friday. Shares fell about 10% during intraday trading Thursday morning. The company’s market cap is $ 2.3 billion.
On Wednesday, the company also raised its focus on capital and operating expenses this year, citing largely decisions to accelerate the development of its second product (a van) and do more in domestic production.
Lordstown went public through a special purpose acquisition company, or SPAC, in October. It is among a growing group of electric vehicle companies that are made public through offers with SPAC, which have become a popular way to raise money on Wall Street because they have a more rational regulatory process than public offerings. traditional initials.
Hindenburg’s report on Lordstown comes about six months after a scathing report was released 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 occurs when investors, mostly professional hedge fund managers, borrow shares from a broker and sell them in hopes of buying them back cheaper. If the shares fall, investors reap the benefits of the difference when they return the shares to the broker.