Lordstown Motors Companies was supposed to be building electric trucks at a former GM plant in Ohio. However, the company, which went public in October 2020, appears to be yet another electric/alternative truck folly. You may remember that Nikola, the maker of a hydrogen-powered truck, admitted last December that it sales video showing one of its trucks rolling along quite quickly was actually just rolling down a hill, courtesy of gravity. Soon after its CEO disappeared and GM was left holding the keys to a nonworking truck and a bad investment.
Lordstown admitted earlier this month that it did not have the resources to begin producing trucks. When it issued its first financials there was a 23-cent-per-share loss. The CEO said, however, that his company had “pretty binding orders” for the truck. Three days later there was a clarification. Once the lawyers took over with a formal SEC filing the language was that its vehicle purchase agreements “do not commit the counterparts to purchase vehicles, but we believe that they provide us with a significant indicator of demand.” It all depends on the meaning of the term “order,” or more relevantly “nonbinding orders.” Two board members had already resigned over their disagreements with management on the definition of “orders.”
Let’s add to the excitement that with the nonbinding orders came the disclosure that several top executives at Lordstown unloaded their stock just prior to the public announcement of its earnings (or, more accurately, the lack thereof). As one expert phrased it, the stock trades reflect “weak internal controls.” However, internal controls are but the guard rails. What you have here is a company with letters of interest from truck purchasers for trucks that the company lacks the funds to produce.
This is a company in bad need of some truth, candor, transparency, orders, and trucks. So far, it looks like it is 0 for 5.
