Short Seller Takes Aim at Another EV Maker

Many new electric-vehicle start-ups have no sales and big aspirations. Electric truck maker Lordstown Motors is one of them. The company doesn’t sell EVs yet, but expects to start selling its all-electric truck called Endurance later in 2021. After the launch, Lordstown projects explosive growth off its 2021 base in 2022 and beyond.

One short seller, however, isn’t buying it.

On Friday morning, Hindenburg Research published a negative research report about Lordstown Motors (ticker: RIDE). The report makes several claims, notably that not all of the preorders the company has claimed are real.

The report is hitting the stock. Shares are down 20%, at $14.18, in Friday morning trading. The S&P 500, by comparison, is down 0.5%. The Dow Jones Industrial Average is up 0.5%.

On Jan. 11, Lordstown reported more than 100,000 preorders for its Endurance pickup truck launched this past summer. Hindenburg claims in its report that it has talked to some Lordstown preorder customers, and points out some it found that don’t have the cash to buy ordered trucks and that preorders don’t carry a commitment to purchase or a penalty to cancel.

Lordstown wasn’t immediately available to comment on the Hindenburg report.

Preorders in the EV industry are fairly common. Tesla (TSLA), when it launched its Cybertruck, regularly reported preorders. Tesla racked up hundreds of thousands in vehicle preorders before it stopped reporting the number. A Cybertruck could be reserved for US$100, which is fully refundable.

Hindenburg is the firm that published a negative research report about electric- and hydrogen-powered trucking company Nikola (NKLA) back in September 2020. Hindenburg alleged Nikola management misled investors. Nikola denied the claims. The report, however, led to the departure of company founder Trevor Milton.

An internal investigation conducted by an outside firm at the behest of Nikola followed and, as a result, the company disclosed in its annual report nine statements made by Miltion which may have been partially untrue.

At the time of the report, Hindenburg was short Nikola stock, betting that its price would decline. Now, Hindenburg is short Lordstown stock and stands to gain as it falls.

Lordstown became a publicly traded company in 2020 after merging with a special purpose acquisition company. The company, founded by Steve Burns, purchased an Ohio plant from General Motors (GM) to kick-start its growth plants.

The company projects more than $100 million in sales for 2021, growing to $1.7 billion in sales in 2022 and then to $5.8 billion by 2024. Vehicle deliveries over that span are projected to go from 2,200 in 2021 to more than 100,000 in 2024.

Lordstown will report fourth-quarter results on March 17 after the market closes. Investors and analysts will have a chance to hear from management then.

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Short Seller Takes Aim at Another EV Maker

Not all EVs are built the same in market.

The waterfront residence is one of Port Stephens’ finest homes.