Lordstown Motors (NASDAQ: RIDE) stock sank more than 10% today after the company slashed its production guidance for the year and also said that it needed to raise fresh capital.
Read more about the cut in production guidance here.
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The company went public last year in a reverse merger with Diamond Peak Holdings Corp., a special purpose acquisition company (SPAC). The business combination valued the company at $1.6 billion and it is currently trading below that valuation. The company received proceeds of $675 million as part of the deal to push through the initial production. In the few weeks following the announcement, shares more than tripled and reached a peak of $31.80 but have remained volatile ever since. The shares closed at $9.67 on Monday and are down more than 10% today.
We take a look at three other times Lordstown Motors disappointed investors in the past.
Short-seller accused the company of faking pre-orders
The short-seller firm, Hindenburg Research, alleged the company was misleading investors “on both its demand and production capabilities”. After the release of the report, the Securities and Exchange Commission (SEC) opened an investigation, which was acknowledged by the company.
“Our research has revealed that Lordstown’s order book consists of fake or entirely non-binding orders, from customers that generally do not even have fleets of vehicles. According to former employees and business partners, CEO Steve Burns sought to book orders, regardless of quality, purely as a tool to raise capital and confer legitimacy,” noted the analysts at Hindenburg Research.
Lordstown withdrew mid-way from a desert race
The company hyped the participation of a modified version of its upcoming pickup truck Endurance in the San Felipe 250 desert race. But the Ohio-headquartered firm had to withdraw its truck from the race after completing just the first 40-miles of the total 242.8 mile race.
“We didn’t finish the race because the desert terrain really uses a lot of energy, more than we had anticipated,” said CEO and Founder Steve Burns on the withdrawal.
Endurance prototype caught fire on its first test drive
In another incident back in January, a prototype of its Endurance pickup truck caught fire on its first test drive. The company did not reveal the information to the public for almost a month after the incident. Much of the details of the fire were revealed in a police report obtained by Hindenburg Research.