Lordstown Motors’ top two executives resign as problems with starting Ohio’s electric truck continue to escalate
The two main executives of Lordstown Motors have resigned due to problems with the start-up assembly of Ohio’s electric trucks.
CEO Steve Burns and CFO Julio Rodriguez have resigned, the company said Monday morning, already pushing shares down 40% this year, falling more than 21%.
Still, Lordstown ran into problems soon after it became a publicly traded company last year through a merger with a specialist acquisition company. IPO through a PSPC is generally faster than traditional initial public offerings that are typically handled by large financial institutions.
In January, a prototype Endurance pickup truck caught fire 10 minutes after its initial test began in Michigan. Then, the company did not pay $ 570,000 in property taxes due in early March.
The company’s shares have been on a sharply downward trajectory since February, and the stock fell below the initial public offering price of around $ 10 on Monday.
It could get worse.
Burns, the outgoing CEO, is the largest shareholder in the company with a 26.25% stake, according to FactSet.
Investors who stay may not want to stick around to find out what happens if and when Burns starts offloading his shares, according to Morgan Stanley’s Adam Jonas.
This dynamic is taking place as Lordstown’s operations come under scrutiny, from which it was partially shielded when it was made public through a PSPC.
SPACs can reduce the time it takes for a company to trade its shares on the stock exchange by up to 75%, compared to the traditional process of an initial public offering. After-sales services can also facilitate the enrollment of potential buyers. Companies that take the PSPC route often feel more empowered to highlight the high growth projections they expect in the future, for example. In a traditional IPO, the company is limited to highlighting its past performance, which may not be a good selling point for young startups who typically fail to generate large profits or revenue.
Lordstown investors include General Motors, which took a 5% stake. Spokesman Jim Cain said Monday that the company’s investment is unchanged.
Lordstown on Monday appointed senior independent director Angela Strand as executive chairman and said she would oversee the organization’s transition until a permanent CEO is found. Strand is the Managing Director of the consulting firm Strand Strategy.
Becky Roof, who served as interim CFO at Eastman Kodak, Hudson’s Bay and Saks Fifth Avenue, has been appointed as interim CFO at Lordstown.
The company hired an executive search firm to search for a new CEO and CFO.
Also on Monday, the company responded to a scathing March report from short-selling firm Hindenburg Research, which questioned the number of pre-orders the company claimed to have received for its Endurance-branded vehicle.
The report has given rise to four potential class actions against Lordstown by investors who claim they have been defrauded.
Lordstown said its independent investigation found the vast majority of the Hindenburg report to be unfounded. However, he acknowledged that a potential buyer who has made a large number of pre-orders does not appear to have the adequate resources to make those purchases. Other pre-orders seem too vague or weak to be reliable, the company said on Monday.
AP Business writer Stan Choe in New York and AP Auto writer Tom Krisher in Detroit contributed to this story.