Electric truck maker Lordstown Motors shares slide after CEO and CFO resign

Electric truck maker Lordstown Motors shares slide after CEO and CFO resign

Via CNBC.com:

Lordstown Motors said Monday that CEO Steve Burns and CFO Julio Rodriguez have resigned. The announcement came days after the electric truck maker warned that it had “substantial doubt” about its ability to continue as a going concern in the next year.

Shares of Lordstown, which went public through a special purpose acquisition company in October, slid 18.8% Monday to $9.26.

Lordstown said its lead independent director, Angela Strand, has been appointed executive chairwoman and would oversee the firm’s transition until a permanent CEO is identified. The company named Becky Roof as interim CFO, effective immediately.

The resignations come amid an internal investigation of the company’s operations into claims by short-seller Hindenburg Research that it misled investors. The Securities and Exchange Commission has opened an inquiry looking at Hindenburg’s claims as well as the company’s merger with SPAC DiamondPeak Holdings.

Hindenburg accused Lordstown in March of using “fake” orders to raise capital for its Endurance electric pickup. The short seller said the pickup was years away from production, but Lordstown has maintained it’s on track to start making the vehicle in September.

Morgan Stanley analyst Adam Jonas said the management change is “an important first step for the company to move forward,” including securing necessary new capital.

“We felt it was untenable for the company to secure necessary new capital with a management team widely seen as potentially not leading the company into the next era of its development,” he said Monday in an investor note.

The resignations are the latest fallout at Ohio-based Lordstown. Shares of the aspiring automaker are down 54% this year. Its market cap is about $2 billion.

In May, the company slashed its production guidance for the year and said it will need to raise additional capital.

Lordstown is among a growing group of electric vehicle start-ups going public through deals with SPACs, which have become a popular way of raising money on Wall Street because they have a more streamlined regulatory process than traditional initial public offerings.

The company is scheduled to host media, investors, analysts and others next week at its plant, a former General Motors facility in Ohio. Strand said those plans are still in place.

“We remain committed to delivering on our production and commercialization objectives, holding ourselves to the highest standards of operation and performance and creating value for shareholders,” she said in a statement. “Along with the management team, I will continue to work closely with them and the Board to execute on Lordstown’s vision for the future of electrified transportation.”

Burns is the latest high-profile executive of a SPAC-backed automotive company to resign. Nikola Chairman Trevor Milton, who was CEO ahead of the company’s June 2020 IPO, resigned last year amid SEC inquires following a separate Hindenburg Research report that accused Milton and the company of misleading investors.

More recently, Canoo CEO Ulrich Kranz, a former BMW executive, resigned from the EV start-up in April. He was recently hired by Apple.