- CEO Steve Burns and CFO Julio Rodriguez have stepped down.
- A probe found some issues related to pre-orders.
- Lordstown has flagged concerns in continuing business as a going concern.
Lordstown Motors Corp. (NASDAQ: RIDE) stock plunged as much as 21 percent in Monday’s trading after the electric truck startup announced the resignation of its CEO and CFO.
The announcement comes a few days after the company expressed doubts about its ability to continue as a going concern.
CEO, CFO resigns
Lordstown said on June 14 its CEO Steve Burns and CFO Julio Rodriguez stepped down from the company, effective immediately. Burns also quit from Lordstown’s board. The Ohio-based automaker has roped in a search firm for a permanent CEO and CFO.
Meanwhile, Lordstown’s lead independent director Angela Strand will become the company’s executive chairwoman, while Becky Roof will be the interim CFO.
The resignations came on the same day when the company released a statement regarding the investigation by the board's special committee into allegations made by Hindenburg Research.
In March, short-seller Hindenburg Research alleged that Lordstown’s order book for its Endurance electric pickup has “fake or entirely non-binding orders”. CEO Burns “sought to book orders, regardless of quality,” to raise capital and confer legitimacy.
In a statement, Lordstown said the probe found some issues on pre-orders.
In 2020, electric truck startup Nikola Corp.’s founder Trevor Milton had to step down from his role of executive chairman after Hindenburg Research alleged that the company is an “intricate fraud” built on the lies of Milton’s career.
Flags concerns in continuing the business
On June 8, Lordstown said it does not have the capital required to implement business plans. The company also noted that there is no assurance on the availably of more funds.
In May, Lordstown cut its target of Endurance by half to approximately 1,000 units following significantly higher-than-anticipated costs for equipment, shipping and engineering resources. The production is expected to start in the second half of 2021.
In the first quarter ended March, the company reported a net loss of US$ 125.2 million, wider than the US$11.87 million net loss in the year-ago quarter.
Lordstown became public on NASDAQ in October 2020 following a reverse merger with a special purpose acquisition company. Since the listing, Lordstown stock declined 52 percent and is down 54 percent year to date.
The shares ended Monday’s trading at US$9.26, down 18.84 percent.