Short Seller Takes Aim at Another EV Maker
Not all EVs are built the same in market.
2 min
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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Fourth-quarter revenue climbed 24% to 110.61 billion yuan, equivalent to $15.30 billion, but missed estimates.
Fourth-quarter revenue climbed 24% to 110.61 billion yuan, equivalent to $15.30 billion, but missed estimates.
2 minThe Chinese owner of bargain app Temu reported slower quarterly profit and revenue growth, capping a turbulent year for the e-commerce giant as it faced stiff competition at home, geopolitical tensions abroad and U.S. tariff uncertainties.
PDD Holdings on Thursday said fourth-quarter revenue climbed 24% to 110.61 billion yuan, equivalent to $15.30 billion, missing a Visible Alpha estimate of 117.83 billion yuan. It was the slowest pace of growth since the first quarter of 2022.
Net profit rose 18% from a year earlier to 27.45 billion yuan, topping analysts’ expectations of 27.00 billion yuan. However, the growth was slower than the 61% rise in the third quarter and the more than twofold increase a year earlier.
“Looking ahead, we will continue to prioritize investments in the platform ecosystem as the cornerstone of our long-term value creation strategy,” said Jun Liu, PDD’s vice president of finance.
Jefferies analysts in a note said PDD’s top-line miss was due to slower-than-expected revenue growth from transaction services, while revenue from online marketing services and others was in line with consensus.
The easing momentum contrasted sharply with the stunning growth rates the company delivered in past years. PDD last year repeatedly warned of a slowdown, pointing to intensifying competition and external challenges.
Pinduoduo, the company’s discount platform in China, has grown rapidly since it launched nearly a decade ago, taking market share from e-commerce stalwarts Alibaba and JD.com . Its sister platform Temu burst onto the international scene in 2022 and swiftly gained attention in the U.S., attracting customers with low prices.
However, Temu has also encountered regulatory scrutiny as it expands overseas. U.S. President Trump in February delayed his plan to end a provision for China imports that lets platforms avoid paying import duties and customs inspections on low-value packages, offering the likes of Temu a brief reprieve.
For the full year, PDD’s total revenue rose 59% to 393.84 billion yuan and net profit climbed 87% to 60.03 billion yuan.
Last month, rival Alibaba posted its fastest pace of revenue growth since late 2023, with revenue for the latest quarter rising 7.6% to 280 billion yuan. Online retailer JD.com earlier this month nearly tripled its quarterly net profit as revenue climbed 13% to 346.99 billion yuan.
U.S.-listed PDD was recently 6.5% lower in premarket trading after the results.
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