Lordstown Motors execs sold millions in stock before woes became public
A handful of executives at Lordstown Motors Corp. sold millions of dollars worth of stock before the electric-truck startup released disappointing first-quarter earnings.
The company's current president and former chief financial officer are among the five executives who sold more than $8 million in stock in early February, regulatory filings show. The transactions, first reported by the Wall Street Journal, include Chuan "John" Vo, the head of the company's propulsion unit, selling 99.3% of his vested shares for more than $2.5 million. Lordstown Motors President Rich Schmidt sold 39% of his vested shares over a two-day period to pocket $4.6 million, according to the filings.
The two-year-old startup in mid-March reported year-end results that had it tallying a net loss of $100.6 million in 2020 and sales of just $2.6 million.
The executive stock sales came when shares were trading near an all-time high in the mid $20s. The stock's price fell on the dismal financial report. On Monday, shares of Lordstown Motors were down more than 5%, closing at $10.07.
The stock sales are the latest bout of negative press for the company, which is named after the former General Motors factory in Ohio, which it purchased from the automaker in 2019. GM in late 2018 said it no longer had a product for the plant's more than 1,400 hourly employees to produce.
Lordstown Motors says it plans to manufacture electric trucks at the former GM plant, but has yet to start making its first model, a battery-powered pickup called the Endurance.
Lordstown Motors CEO Steve Burns had earlier cited his company's preorders to illustrate demand for the Endurance, telling CNBC in November that "they're very serious orders."
Nonbinding preorders
Lordstown Motors in December, however, disclosed in a regulatory filing that it did not have any current customers or pending orders, and stated there was no assurance that nonbinding preorders would ultimately become sales. It acknowledged that more than 100,000 reservations for its truck were nonbinding in a January news release.
The company drew heightened scrutiny in March, after Hindenburg Research claimed it was misleading investors with phony claims of preorders. Hindenburg, which also disclosed it held a short position in Lordstown, called the company's order book a "mirage."
Lordstown Motors earlier this month amended the annual statement to include a cautionary note that it did not have the financing to start production and might not be able to continue as a going concern.
Burns and CFO Julio Rodriguez resigned last week as the company said a board committee had determined some disclosures about preorders for its truck were not accurate.
The company has received two subpoenas from the Securities and Exchange Commission and said it is cooperating with SEC probes into its preorders and its complex reverse merger with DiamondPeak Holdings Corp. through a special-purpose acquisition company, or SPAC, through which Lordstown went public in October.
