Before the markets opened on March 12, 2021, analyst Hindenburg Research published a scathing report on the electric light duty truck manufacturer entitled “The Lordstown Motors Mirage: Fake Orders, Undisclosed Production Hurdles, and a Prototype Inferno.” According to Hindenburg, the company’s claimed 100,000 pre-orders for its EV truck are “largely fictitious and used as a prop to raise capital and confer legitimacy.” Hindenburg further cited significant, undisclosed production delays and a prototype that “burst into flames 10 minutes before the test drive” in January 2021, substantiating claims by former employees that the company is not conducting the needed testing or validation required by the NHTSA. On this news, Lordstown shares fell by 17% in one trading day.
Then, after the markets closed on March 17, 2021, reports emerged that Lordstown disclosed that the Company is the subject of an SEC inquiry for information following the release of the Hindenburg Research report. Then before the markets opened on March 18, 2021, Lordstown’s CEO, Stephen Burns, appeared on CNBC and stated “We never said we had orders. We don’t have a product yet so by definition you can’t have orders.” Lordstown shares fell approximately another 9% on this news.
Block & Leviton LLP has filed a securities class action on behalf of shareholders against Lordstown and certain of its investigators for securities fraud. The lawsuit is captioned Rico v. Lordstown Motors Corp., et al., No. 4:21-cv-00616 (N.D. Ohio). The case was filed in the U.S. District Court for the Northern District of Ohio.