Shares of Lordstown Motors (NASDAQ:RIDE) stock are falling hard on Friday morning after a recent article published by short-seller Hindenburg Research.
So what do you need to know? Hindenburg describes the electric vehicle business as a “mirage” of “fake orders, undisclosed production hurdles, and a prototype inferno.”
Throughout the report, Hindenburg alleges that preorder agreements and design modifications have pushed the production timeline back. And with plenty more accusations, many aspects of the company’s operations are now in question.
“Lordstown is an electric vehicle SPAC with no revenue and no sellable product, which we believe has misled investors on both its demand and production capabilities,” Hindenburg said. “The company has consistently pointed to its book of 100,000 pre-orders as proof of deep demand for its proposed EV truck. Our conversations with former employees, business partners and an extensive document review show that the company’s orders are largely fictitious and used as a prop to raise capital and confer legitimacy.”
In turn, Hindenburg Research has taken a short position in the EV firm. And now, RIDE stock is taking a major beating.
Additionally, Reuters reported that Lordstown Motors did not immediately respond to a request for comment.
RIDE stock was down 19.5% as of Friday morning.
On the date of publication, Nick Clarkson did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Nick Clarkson is a web editor at InvestorPlace.
