Electric truck maker Lordstown warns of going concern risk; shares tank

The Lordstown Motors factory is where GM once operated, in Lordstown, Ohio, on October 16, 2020.

Megan Jelinger | AFP | Getty Images

U.S. electric truck maker Lordstown Motors said on Tuesday there was “substantial doubt” about its ability to continue as a going concern, sending its shares down 16%.

“The company believes that its current level of cash and cash equivalents are not sufficient to fund commercial scale production and the launch of sale of such vehicles,” Lordstown said in a quarterly filing with the U.S. Securities and Exchange Commission.

“These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of at least one year from the date of issuance of these unaudited condensed consolidated financial statements,” the company added.

A Lordstown spokesman could not immediately be reached for additional comment.

Lordstown, which went public last year through a reverse merger with a special-purpose acquisition company (SPAC), has struggled with the launch of its Endurance pickup truck. The truck is being built at a former General Motors plant in northeast Ohio.

Last month, Lordstown said its Endurance production this year would be half its prior expectations and it needed additional capital to execute its plans.

In March, Lordstown’s shares slumped after Hindenburg Research disclosed it had taken a short position on the stock, saying the company had misled consumers and investors.

Short sellers bet the price of a stock will fall by borrowing shares in the hope of buying them back at a cheaper price and pocketing the difference.

GM, which is a minority shareholder in Lordstown, declined to comment on the Lordstown filing.

Lordstown reported a net loss of $125.2 million for the quarter ended March 31, and had cash and cash equivalents of about $587 million and an accumulated deficit of $259.7 million as of March 31.

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