Shares of Lordstown Motors Corp. plummeted Friday afternoon on reports that the U.S. Justice Department is looking into the company's misrepresentations about preorders for its Endurance electric pickup truck for fleet operators.
Lordstown Motors shares (Nasdaq: RIDE) closed Friday down 11% to $9.23, falling as far as to $8.83 at 11:30 a.m.
A Wall Street Journal story, which quotes unnamed sources, was among the first to break the story shortly after noon on Friday.
The emerging growth company in Lordstown Village, Ohio, has been gearing up to produce its first model — the all-electric Endurance for fleet operators — this fall.
Trouble surfaced in March with the publication of an investment report that accused the company of misleading shareholders about its truck preorders and progress toward starting production.
While Lordstown Motors began cooperating with a Securities and Exchange Commission investigation, former CEO, Steve Burns, signaled confidence that his company would begin production, as planned.
In late May, Burns scaled back his plans, saying the company would produce about half the number of vehicles expected without additional capital.
On Friday, June 9, the company revealed that it had insufficient cash to begin producing and selling its electric truck in late September.
Worse yet, the production stall cast "substantial doubt" on whether Lordstown Motors would be able to operate for a year without a cash infusion, according to a regulatory filing.
The following Sunday, Burns, who was founder, chief executive officer and chairman, and Julio Rodriguez, chief financial officer, resigned following a company investigation that found they had made some misstatements about the demand for Endurance.
The company has since promoted and hired new leaders, is trying to clarify what "binding orders" actually mean and is trying to win back investor confidence.
The company's shares have fallen 49% since going public on Oct. 23, 2020.
