EV startup Lordstown Motors (RIDE) continues facing an uphill battle in bringing its Endurance electric pickup to market. The company’s founder and former CEO has now sold his entire stake in Lordstown as a dispute with Foxconn over funding could end in bankruptcy.
Lordstown founder sells entire stake in the EV startup
According to Lordstown’s latest SEC filing, founder and former CEO Stephen Burns now owns zero shares in the company.
The filing shows Burns sold his stake in Lordstown on three different occasions. He sold 581,000 shares on May 23, 2023, another 200,000 on May 24, and the last 591,752 on June 16.
Burns established Lordstown in 2019 following a deal to take over the former General Motors Lordstown plant. After going public in 2020 via a SPAC deal, Lordstown saw its valuation soar as interest and demand in EVs climbed to new heights.
The hype was short-lived after short-seller Hindenburg Research released a report accusing the EV startup of inflating Endurance electric truck pre-orders.
Hindenburg noted Burns, CEO at the time, boasted of having pre-sold 100,000 vehicles, which would generate over $5 billion in revenue. Meanwhile, executives and directors unloaded roughly $28 billion in stock despite being publicly listed for less than two years.
Shortly after the accusations, Burns and CFO Julio Rodriquez abruptly resigned in June 2021, leaving the fate of the Endurance electric truck up in the air.
After the executives stepped away, new leadership took over. On the verge of bankruptcy, Lordstown found a savior after selling the Lordstown plant to Foxconn, which included an additional +$100 million investment in the company.
After injecting several rounds of funds into the EV startup, Foxconn is looking to back out of the deal. Lordstown received a stock delisting notice from the Nasdaq in April, and as a result, the Taiwanese manufacturing giant claimed the EV startup was in violation of their equity purchase agreement.
As such, Foxconn has failed to invest the additional $47.3 million that was part of the initial deal. Lordstown implemented a 1:15 reverse stock split designed to boost share prices as it hopes to avoid filing for bankruptcy.
Although the move has satisfied the Nasdaq’s $1.00 minimum listing requirements, Lordstown said Foxconn has still not acknowledged its obligations and, therefore, threatened to take legal action.
Lordstown’s stock is down 4% today following the news. We’ll keep you updated when we hear more on the Lordstown-Foxconn situation.
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