It’s beyond time for Lordstown Motors (RIDE) to get some real leaders in its C-suite and on the board before the whole electric car experiment really gets short-circuited.
“To clarify recent comments from business leaders at the Automotive Press Association online media event on June 15, although these vehicle purchase agreements provide us with a significant indicator of demand for Endurance, these agreements do not represent binding purchase orders or other fixed purchase obligations,” Lordstown Motors said Thursday. in a new archive.
The filing comes a day after Lordstown President Rich Schmidt said during an event that the company had firm orders for all Endurance electric trucks it intends to build this year and 2022.
“These vehicle purchase agreements generally include an expected buyer order plan over the term of the agreement of three to five years and can be terminated by both parties after 30 days̵
Shares in Lordstown fell nearly 3% on the news. The stock is down 8.8% on the week.
In short, it has been a disastrous week for the start-up manufacturer of electric trucks – one that only gives cause for concern on the streets if the company wants to survive.
Lordstown Motors said Monday that CEO and founder Steve Burns and CFO Julio Rodriguez retired after a special board committee found pre-order information on endurance to be inaccurate. Angela Strand – its senior independent director – took over the CEO position until a permanent manager is found. Becky Roof – an external hire with extensive financial function experience – was appointed interim CFO.
Strand declared at Wednesday’s event that it was a “new day” for Lordstown. It certainly does not look like that.
The executive layoffs are quickly following in the footsteps of Lordstown, who warns in an SEC filing its ability to continue as an ongoing business. Lordstown is also a few weeks away from telling investors they needed cash – quickly – if they were to reach its new lowered production targets for its electric truck called the Endurance.
Even with the waves of downright ugly news, there could soon be more shoes to fall on Lordstown investors.
First, it is unclear what Burns is doing with its nearly 27% stake in Lordstown. Dumping Lordstown shares could create more selling pressure in the market. It would not be too different than when now ex-Nikola CEO and founder Trevor Milton sold a large stock of shares in April, which put pressure on the share price. Milton left the company following a critical report from Hindenburg Research in late 2020.
“Expect technical sales pressure in connection with potential divestment of shares from outgoing management, in particular Mr Burns, the largest single shareholder in RIDE with a share of 26.25% according to the amended 10-K filed June 8, 2021 (46 , 35 million shares), “Morgan Stanley auto analyst Adam Jonas said in a note to clients.
The second concern for investors is if permanent management – once solidified – sticks to the Endurance truck’s signature hub and engine design. If they do not, it can prove to be very expensive to revise.
Jonas explained, “We continue to believe that the biggest problem facing the company is the reliance on the propulsion systems’ hub motors. Although a change in architecture will add as much as a year or two to production starts, we believe , that we are moving to an alternative engine strategy or a completely different product and a “go-to-market” strategy may be necessary to maintain a sustainable equity value.It is our understanding that Steve Burns was the primary spokesman for the hub engine system. “
And finally, there are still the skeletons in Lordstown’s closet from Burns, creating a host of unknowns as the new management eventually digs in. Consider these facts: two of the company’s board members (Strand and John Rucidlo) have ties (both worked there during Burns’ employment) to Workhorse Group, the trucking company founded by Burns.
Meanwhile, the entire Lordstown board oversaw the creation of its existing root.
It is likely that most of the board will need to be audited along with the Burns-created management team. At this point, given the existing outbreak in Lordstown, investors would likely welcome the installation of new faces to the top 10 executive positions in the company and a complete update of the board.
The alternative to this: several weeks like this for Lordstown.
Brian Sozzi is editor by and large anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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