Lordstown Motors stock sinks after report calls pre-orders a ‘mirage’

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Lordstown Motors shares plummeted Friday after a fiery short-seller accused the electric-vehicle startup of touting bogus pre-orders for its forthcoming pickup truck.

The General Motors-backed company is the latest target of Hindenburg Research, which rose to prominence last September after publishing a damning report on Nikola, another buzzy electric-truck maker.

Lordstown’s stock price plummeted as much as 23 percent after Hindenburg published a new report accusing the firm of constructing a “mirage” around the Endurance pickup that it’s developing.

Lordstown — named for the Ohio town where it bought a factory that GM famously shuttered in 2019 — has touted its more than 100,000 Endurance reservations as evidence of strong interest in the model.

But many of those “largely fictitious” pre-orders were placed by prospective customers who had no plans to buy anywhere near the number of trucks they reserved, Hindenburg alleged.

Many pre-order clients don’t operate vehicle fleets, which are Lordstown’s target market, according to the firm. One company told Hindenburg that it didn’t plan to buy any of the 1,000 trucks it reserved and reportedly described the pre-order as a marketing relationship.

Lordstown also allegedly paid a consulting firm to drum up pre-orders at a rate of $50 per truck to increase investors’ confidence in the company, according to Hindenburg.

While Lordstown recently claimed it was on track to start producing the Endurance in September, Hindenburg estimates it’s actually three to four years away from production given that the company has not completed crucial testing.

When Lordstown took the Endurance for its first road test in January, the truck burst into flames after just 10 minutes, Hindenburg said, citing a police report and a 911 call from the incident.

Lordstown didn’t immediately respond to a request for comment Friday. But CEO Steve Burns disputed Hindenburg’s claims in an interview with The Wall Street Journal, saying the firm had a motivation to hurt Lordstown’s stock price.

Hindenburg does have a short position in Lordstown, so it will benefit if the company’s share price goes down.

Burns admitted Lordstown paid consultants to round-up pre-orders but said they were meant to assess demand for the truck, which he believes is strong. He reportedly added that some companies that placed reservations are intermediaries rather than fleet operators.

“If a guy signed a piece of paper that said ‘I think I can move x-thousand of them,’ we believe them. But it’s not in blood,” Burns told the Journal. “It’s a nonbinding letter of intent.”

GM — which has invested $75 million in Lordstown, including certain in-kind contributions — declined to comment on Hindenburg’s report.

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