Lordstown now says it has “No Binding Orders” after saying it had “Binding Orders,” after admitting it had “No Binding Orders,” after hyping its binding orders for months. Sheesh.
By Wolf Richter for WOLF STREET.
I mean, anything goes in crazy town that the stock market has become in these fabulous free-money times, right?
Lordstown Motors, a superbly hyped EV SPAC with no revenues and no salable product, rattled some nerves in a devastating admission via an SEC filing on June 8 that warned about running out of money, warned about its “ability to continue as a going concern,” and admitted that it did not have “binding” orders for its electric pickup truck, the Endurance, after having hyped its binding orders for months.
It also announced a housecleaning in its executive suite that swept out CEO Steve Burns and CFO Julio Rodriguez. So that was bad, and shares fell just when the company was trying to raise money.
But wait… On June 15, President Rich Schmidt must have figured out it was time to pump the shares back up to make raising money easier, and at an Automotive Press Association event he said that the company had in fact “firm” and “binding” orders for the first two years of production.
“Currently, we have enough orders for production for ’21 and ’22,” he said. “Those are firm orders we have for those two years.” These are “basically binding orders that are committed here in the last two weeks, reconfirmed orders,” he said when he was asked if they were binding orders. “They’re pretty solid, and I think that’s on the light side or conservative side.” And shares jumped.
Ha, this morning, to “clarify” the lie offered up by President Rich Schmidt on June 15, the company disclosed in an SEC filing that in fact it did not have any “binding purchase orders or other firm commitments.”
It referred to what it had said in its June 8 filing and reiterated that “we have no binding purchase orders or commitments from customers.”
All it has are some loosey-goosey agreements that can be cancelled any time with 30 days’ notice and where there is no down-payment due until 90 days before delivery of the vehicle, whenever that may be, if it takes place at all. The company now says these agreements are just “a significant indicator of demand for the Endurance.”
Binding orders for the capital-intensive production of vehicles is a live-or-die item for Lordstown. And knowing this, the company had been touting its fake binding orders for months.
This became obvious to short-selling firm Hindenburg Research, which came out with a devastating analysis on March 12, titled, “Fake Orders, Undisclosed Production Hurdles, And A Prototype Inferno.”
Following the publication of the Hindenburg analysis, the SEC yawned, sort of woke up, and asked Lordstown for more information about the allegations it had misled investors about the orders.
This morning, the company also announced – likely as result of this entire mess – that it postponed its annual meeting that was supposed to be held today (sorta short notice, don’t ya think?) until August 19.
I mean, Lordstown should just file for bankruptcy and liquidate and get this over with, rather than trying to bamboozle potential new investors into forking over more money to finance more lies.
This case is Exhibit A why this market needs vocal short sellers with a big megaphone more than ever. The SEC didn’t even react until after Hindenburg came out with the allegations. The SEC isn’t doing anything as long as the shares are going up. It’s just when the shares collapse that it might start sniffing around belatedly and ineffectually.
The SEC still hasn’t done anything visible concerning Lordstown, and the lies have continued. Short sellers are not paid by the taxpayer, they’re paid by the success of their bet, or they get crushed. The risks are huge. And they’re the only sheriff left in crazy town since regulators have by all appearances abandoned the place.
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