Shares of Lordstown Motors (NASDAQ:RIDE) have declined by over 65% year-over-year, and former CEO Steve Burns is taking notice. Burns recently sold 5 million shares of RIDE stock amid its lackluster performance.
Burns left the company in mid-2021 after short seller Hindenburg Research alleged that Lordstown’s preorders were “largely fictitious.” Following the allegations, the electric vehicle (EV) company conducted an internal investigation and concluded some of the statements it made about truck preorders were “inaccurate.” It also admitted some preorders were made by potential strategic partners that “did not intend to purchase Endurance trucks directly.”
The Endurance pickup truck has an estimated range of 193 miles and a top speed of 118 mph. It also has a maximum payload of 1,050 lbs. and can be charged with direct current (DC) fast charging. In late November, the Endurance received full homologation for the U.S. and Environmental Protection Agency (EPA) certification. The first units of the truck also left their plant in Ohio for customer delivery.
RIDE Stock: Former CEO Steve Burns Sells 5 Million Shares
However, Burns hasn’t paid much heed to the good news. On Jan. 6, he sold 5 million shares of RIDE at an average price of 87 cents per share. In total, the transaction amounted to $4.35 million. Since November, Burns has sold a total of 13.68 million shares in six separate transactions. Today, he still directly owns 21.68 million shares.
Other insiders of Lordstown are selling out as well. In the past year, insiders have acquired 30,000 shares and disposed of 21.76 million shares. That’s equivalent to a net activity of 21.73 million shares sold in the past year. That doesn’t exactly sound bullish.
Burns’ significant sale is very telling. In the past year, EV companies — especially unprofitable ones — have been heavily scrutinized in a high interest rate environment. During the third quarter, Lordstown reported a net loss of $154.43 million on zero dollars of revenue. It ended the quarter with an operating loss of $154.8 million and a cash balance and short-term investments value of $204 million.
The good news is the company should soon report positive revenue from Endurance sales. The bad news is ramping up production equates to more expenses. As a result, profitability will be very hard to achieve from the emerging EV company.
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.