In another blow to its chances to survive, Lordstown Motors Corp. (NASDAQ: RIDE) is being investigated by the U.S. Attorney’s office in Manhattan. It is not clear what the exact target of the probe is, but a U.S. Securities and Exchange Commission investigation announced earlier has its base in Lordstown’s statements about how many of its electric pickups have been rep-ordered. Apparently, the figures the company bragged about were not firm.
The investigation itself, and its cost, represent another crippling blow to a company that says it does not have enough money to operate another year unless it raised more capital. In June, it officially announced that “substantial doubt” it could move forward for that long a period.
The issue of how solid truck “preorders” were caught up with CEO Steve Burns on June 14 when he resigned. CFO Julio Rodriguez also left. A special committee of the company’s own board conducted an investigation that found, among other things that:
Lordstown Motors has stated on several occasions that its pre-orders were from, or “primarily” from commercial fleets. In fact, many pre-orders were obtained from (i) fleet management companies or other end users that indicated interest in purchasing Endurance trucks, similar to commercial fleets, and (ii) so-called “influencers” or other potential strategic partners that committed to attempt to secure pre-orders from other entities, but did not intend to purchase Endurance trucks directly.
There are also dozens of class action suits against Lordstown based on the fact it misled investors and that the stock cratered when disclosures about management and the preorders were made public. The shares peaked at $31.80 and currently trade at $9.23. A Chapter 11 filing, which seems more likely each day, would take the share prices into the pennies and could drive them to zero.
There is nothing left of Lordstown Motors other than idle manufacturing operations and a modest number of employees. No one will put money into the company. It is just a matter of time before Lordstown is only history.