Lordstown Motors, the embattled electrical truck startup, is facing more scrutiny after a number of its top executives sold off countless dollars of inventory before its gloomy first-quarter earnings report.
Regulatory figures reveal five Lordstown executives, including its former chief financial officer and its present president, sold over $8 million in stock in early February. The Wall Street Journal first reported that the trades.
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In 1 case, John Vo, that supervises Lordstown’s propulsion branch, sold 99.3percent of his vested shares, netting himself over $2.5 million. Lordstown’s president, Rich Schmidt, marketed 39 percent of his vested stocks and earned $4.6 million, based on filings. Other executives sold hundreds of thousands of dollars worth of inventory, also.
On March 17, Lordstown Motors announced a net loss of $100.6 million in 2020, earning only $2.6 million in earnings. Lordstown hasn’t yet started delivering its Endurance pickup truck, which the company says will be available by the end of 2021.
The firm said in a statement which the executives'”trades were created for reasons unrelated to the functioning of the organization or viability of the Endurance, and every such director and executive kept considerable Lordstown Motors equity holdings in the shape of stocks and options after the earnings and transfers described in the organization’s public filings.”
However, the timing of these earnings — a month ahead of the provider’s earnings report — is equally odd. Many businesses prevent executives from selling the inventory to get a stretch resulting in their own financial disclosures.
The Lordstown executives offered the inventory in the mid $20s per share, close to its all-time large. The inventory began to slide following the executive share earnings. Shares dropped more after the organization’s disappointing quarterly fiscal report. They dropped even further in late March following Hindenburg Research, a company that produces bets that the purchase price of an organization’s stock will return, contested the validity of their contracts which Lordstown Motors was telling investors it had in hand. Additionally, it stated the Endurance had caught fire on its initial test drive.
Lordstown’s stock tumbled under $9 in May. Shares dropped 4 percent to $10.20 Monday.
The contentious inventory sales are the newest blemish for the organization, which will be called after the former General Motors factory in Ohio it took over following the heritage automaker sold it.
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Last week, Lordstown explained that it doesn’t have any firm orders for its own vehicles, backtracking on assurances it made earlier this week the firm had sufficient dedicated buyers because of its pickup truck to keep production moving through 2022.
This news followed the statement that its CEO and chief financial officer were stepping. Lordstown did not provide a definite reason for the departures of both CEO Steve Burns and CFO Julio Rodriguez.