Lordstown Motors' latest snafu slams stock

Lordstown Motors shares fell 5.8% in pre-market trading Thursday

Lordstown Motors, which recently warned it does not have enough cash to start commercial production and raised doubts about its ability to remain in business through the end of the year, has now revealed it does not have binding purchase orders or commitments from customers on its electric Endurance pickup truck

Ticker Security Last Change Change %
RIDE LORDSTOWN MOTORS 6.20 -0.36 -5.49%

The announcement, which sent shares plummeting 5.8% in pre-market trading Thursday, is a reversal from Lordstown President Rich Schmidt's comments during an Automotive Press Association event in Detroit on Tuesday, where he claimed the startup automaker had firm and binding orders for the first two years of the Endurance's production.

"Although these vehicle purchase agreements provide us with a significant indicator of demand for the Endurance, these agreements do not represent binding purchase orders or other firm purchase commitments," Lordstown wrote in an Securities and Exchange Commission filing Thursday.

LORDSTOWN MOTORS CEO, CFO RESIGN AS STARTUP'S STRUGGLES CONTINUE

The latest troubles come just days after CEO Steve Burns and CFO Julio Rodriguez resigned from the company. Burns, who founded Lordstown and remains its largest shareholder, also resigned from the board of directors. 

The resignations followed the conclusion of Lordstown's internal investigation into allegations made by short-seller Hindenburg Research in March that the company misled its customers and investors through various statements related to the Endurance. A special committee formed by the company's board of directors refuted many of the claims made by Hindenburg Research, including the viability of its technology, but admitted it "made periodic disclosures regarding pre-orders which were, in certain respects, inaccurate."

Among them were statements that indicated reservations for its Endurance pickup were coming "primarily" from commercial fleets when they were in fact being made by fleet management companies and brokers to third-party fleets.

The committee also determined that one entity placed a large order that it didn't appear to have the resources to support while several other commitments "appear too vague or infirm to be appropriately included in the total number of pre-orders disclosed."

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Lordstown Lead Independent Director Angela Strand has been appointed executive chair and will oversee the company until a new CEO is found, while Becky Roof has been named interim CFO.

The company has also brought on senior automotive executive John Whitcomb on as Lordstown's vice president of global commercial operations. Previously, Whitcomb served as Ernst & Young's managing director of global automotive and mobility and General Motors' director of global retail sales and technology. 

Beginning June 21, he will be tasked with driving the company's overall go-to-market strategy ahead of the Endurance's limited production beginning in late September.

"In the newly created role, Mr. Whitcomb will develop the strategic business model for the Company's sales and service footprint and lead a team to establish a national sales network. He will be responsible for developing service and after-sales strategies and processes as the Company prepares for production, drawing on his experience as a leader of marketing, sales and service in the global auto sector," Lordstown said. "Additionally, he will be tasked with exploring long term international strategies to determine where and when to expand."

Lordstown has also delayed the date of its annual shareholder meeting from June 17 to August 19. All stockholders of record as of the close of business on July 1 are entitled to vote and attend the meeting. Lordstown shares have lost over 43% this year.

FOX Business' Gary Gastelu contributed to this report