Shares of electric vehicle startup Lordstown Motors plunged nearly 14 percent on Thursday (18) after the company was criticized by a leading short-seller last week for raising money in the market by falsifying pre-orders and then revealed on a conference call Wednesday that it was under investigation by regulators.
Hindenburg Research, which previously sniped at Nikola, another electric vehicle start-up, issued another short report last week, saying Lordstown Motors (RIDE-US) used fake orders to raise money in the market and that its pickups were still years away from production.
Although Lordstown Motors CEO Steve Burns declined to tell the media whether the company was being investigated by the SEC, the company admitted during Wednesday’s earnings call that it had been notified by the SEC and asked to provide information about the allegations.
Lordstown Motors plunged 13.78 percent to $13 on Thursday after the news broke, and the stock has fallen about 24 percent since Hindenburg Research issued a report on Friday.
Daily chart of Lordstown Motors shares (chart: Google)
Lordstown had also previously classified the pre-orders as non-binding production orders, but Burns called them “very serious” orders.
Morgan Stanley cut its price target for Lordstown to $12 from $18 on Thursday, with analyst Adam Jonas saying increased spending was the main reason for the downgrade and maintaining a markdown rating.
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