Lordstown Motors CEO and CFO Step Down, Sending The Company's Stock Crashing

Ohio-based electric vehicle startup, Lordstown Motors, announced on Monday that two top executives, co-founder and CEO, Steve Burns and CFO Julio Rodriguez, have stepped down from their positions. This announcement comes just six days after the company amended its annual report with the SEC and disclosed that it did not have enough money to begin commercial production of its vehicle, and runs the risk of failing as a business.

The resignations add to the setbacks Lordstown Motors is facing. The company is currently being investigated as a result of claims by Hindenburg Research. 

Last week, Hindenburg Research revealed that it had taken a short position in Lordstown Motors, accusing the company of using fake orders to raise capital and misleading the public on the actual dates for production of its upcoming vehicles. The US Securities and Exchange Commission has commenced investigations into these claims, as well as the company's SPAC merger with DiamondPeak Holdings. 

While the company did not reveal the reason why the CEO and CFO resigned, its Lead Independent Director, Angela Burns, said that plans to host the media, investors and general public, next week at the Ohio facility are still in place.

“We remain committed to delivering on our production and commercialization objectives, holding ourselves to the highest standards of operation and performance and creating value for shareholders,” she said in a statement. “Along with the management team, I will continue to work closely with them and the Board to execute on Lordstown’s vision for the future of electrified transportation.”

Lordstown Motors named Angela Strand as executive chairman to oversee the company until a suitable replacement is found for former CEO Burns, who will also be giving up his seat on the company's board.

Becky Roof, an accountant, and consultant who previously served as interim CFO at Eastman Kodak will serve as interim CFO of the company replacing Julio Rodriguez.

The news of the resignations has dealt a major blow to the company's stock (RIDE) which already has been struggling, taking it down 18% to $9.08. In 2021 alone, the company's shares have gone down over 40%, bringing its market capitalization down to about $1.6 billion.

This decline in share price has been mainly because the company has had a hard time ramping up production of its electric truck named The Endurance. In 2019, the truck was expected to be released in the US market by late 2020, for $52,500. In November 2020, the release date was delayed, pushing the first deliveries back to September 2021, with production ramping up through 2022. 

Founded in 2018, Lordstown is among a growing group of electric vehicle start-ups that go public through deals with SPACs - SPACs of which are growing to be a popular way of raising money on the stock market due to their more streamlined regulatory process than traditional IPOs.