EV startup Lordstown Motors says it's cooperating with an SEC probe after a short-seller alleged it misled investors
- Lordstown Motors is cooperating with an SEC inquiry following accusations from a short-seller that the company misled investors.
- The company created a committee to review the claims, CEO Steve Burns said Wednesday.
- For 2020, Lordstown reported a $101 million net loss, sending shares down 3% in late trading.
Lordstown Motors said Wednesday that it is cooperating with financial regulators following a short-seller's report that accused the electric-vehicle startup of misleading investors by overstating its order volume.
The Ohio-based upstart is complying with an information request from the US Securities and Exchange Commission, Lordstown's founder and CEO Steve Burns said at the start of the company's inaugural earnings call Wednesday.
Lordstown's board of directors has also appointed an internal committee to review the short-seller's claims, Burns said, adding that the company would not be able to share any more information until the group completes its audit.
Hindenburg Research, the same short-seller that leveled accusations of fraud against electric-truck firm Nikola in September, announced on Friday that it had taken a short position in Lordstown. Hindenburg's claims that sparked an SEC investigation into Nikola eventually led its outspoken founder to resign and helped unravel a deal with General Motors.
Hindenburg said Lordstown has "no revenue and no sellable product" and accused it of misleading investors "on both its demand and production capabilities." Lordstown was founded in 2018 and plans to manufacture a $52,500 electric pickup truck for fleet customers, the Endurance, at a former General Motors plant.
Although Lordstown claims to have 100,000 preorders for the pickup, Hindenburg said the company has artificially juiced those figures to boost its investor appeal. Hindenburg alleges that many preorder holders - including one company that reserved 14,000 units - never intended to follow through on a purchase, and that Lordstown paid consultants to drum up reservations.
"Our conversations with former employees, business partners, and an extensive document review show that the company's orders are largely fictitious and used as a prop to raise capital and confer legitimacy," the short-seller said.
A Lordstown spokesperson on Friday told Insider in an email that the startup "will absolutely be refuting" Hindenburg's report in a future statement.
Hindenburg also alleged that Lordstown is years away from producing the Endurance, citing one former employee.
Lordstown reiterated on Wednesday that it is on track to begin producing the pickup in September, and said that interest in the model has been greater than expected. The company said it will produce several prototypes by the end of March, and that it is accelerating plans to build it's second vehicle, a van.
Lordstown went public through a blank-check merger in October in a deal that valued the firm at $1.6 billion. It now has a market cap of roughly $2.5 billion.
On Wednesday, the company reported a net loss of $101 million for 2020. Shares fell about 3.3% in late trading following the release.