RIDE stock, an overview

RIDE is the ticker symbol for Lordstown Motors. The stock peaked at a whopping $477 in the early 2020s before crashing to earth as quickly as it rose.

The company, which took its name from Lordstown, Ohio, where it was based, operated out of a former General Motors facility and was known for the Lordstown Endurance, an electric pickup truck.

The company has faced various challenges and controversies related to its financial stability, production delays, and leadership changes, which have garnered significant media and investor scrutiny.

RIDE Stock History

On October 23, 2020, Lordstown Motors completed a reverse merger with a special-purpose acquisition company (SPAC) called DiamondPeak Holdings, resulting in its listing on the NASDAQ stock exchange.This merger transaction valued Lordstown Motors at approximately US$1.6 billion. Simultaneously, General Motors (GM) released Lordstown Motors from its mortgage obligations associated with the acquisition of the Lordstown factory.

In March 2021, Hindenburg Research, a firm known for its expertise in short-selling, released a comprehensive report on Lordstown Motors. The report alleged a history of fraudulent activities at Lordstown, asserting that the company had been providing misleading information to investors. This misinformation included exaggerating the demand and orders for its trucks, as well as overstating its capacity to manufacture these vehicles. According to Hindenburg, many of the orders claimed by Lordstown were non-binding expressions of interest, lacking any actual financial commitment from potential buyers.

Lordstown Motors Truck Fire

One of the findings from the Hindenburg report was allegedly garnered from a police report that detailed a fire of a Lordstown vehicle.

“According to the report,” said The Drive’s Peter Holderith, “the vehicle was on its first test drive back in January for approximately 10 minutes before the company’s Director of Powertrain, Pirakalathan Pathmanathan, said the truck started “driving weird.” He decided to pull over, at which point a fire started under the vehicle. A short time after that, the prototype Endurance was completely engulfed in flames. While the prototype fire happened on Jan. 13, it was only revealed to the public nearly a month later on Feb. 10. According to Hindenburg, Lordstown executives with knowledge of the situation sold $8.8 million in stock before the public was aware of the incident.”

Hindenburg’s report also raised concerns about significant production delays, suggesting that Lordstown was far behind its stated production timeline, with trucks projected to be three to four years away from being manufactured. The report also highlighted insider stock sales during vehicle testing issues and questioned the background of Lordstown’s founder, Steve Burns.

Following the release of the Hindenburg Research report, Lordstown Motors’ stock price dropped by 17% on that day. In response, the company issued a statement indicating its intent to provide a comprehensive rebuttal in the coming days, firmly refuting the claims made in the report.

Furthermore, the report’s impact led to the U.S. Securities and Exchange Commission (SEC) initiating an inquiry, seeking information from Lordstown Motors to investigate the allegations of investor deception brought forth by the short-selling research firm.

“Lordstown was part of a frenzy of EV-related companies brought public during 2020 and 2021 through special purpose acquisition companies, or SPACs. They are formed as investment vehicles with the sole purpose of raising funds and then finding and merging with a privately held company,” CNBC’s Michael Wayland wrote in May of 2023.”Most, if not all, of the SPAC-backed companies never came close to reaching overinflated plans that were presented to investors as the companies went public. Many of them have fledgling operations and were involved in scandals, investor lawsuits or investigations by federal officials.There was high interest by investors in Lordstown when the company went public in October 2020. But the excitement fizzled following changes to business plans and executives. Not to mention, a SEC probe as well as competition from Ford’s electric F-150 Lightning pickup, a less expensive and more-trusted vehicle.”

The Lordstown Endurance pickup truck

The Lordstown Endurance was an electric pickup truck. Its innovative design features independent wheel hub motors on all four wheels, eliminating the need for traditional wheel axles and transmissions. Initially slated for a U.S. market release in late 2020 with a price tag of $52,500, the launch faced delays, and the first deliveries were postponed to September 2021, with production scaling up through 2022.

As of October 2021, the production date for the Endurance was pushed back once more, with no earlier release date than April 2022. This delay followed news in September that the Lordstown auto plant would be sold to Foxconn, which would take on the role of contract manufacturer for the Endurance.

In October 2021, Foxconn introduced three new prototype vehicles, including the Model C SUV set to launch in Taiwan in 2023, an electric bus slated for testing in select cities in 2022, and a new electric sedan.

On August 4, 2022, Lordstown Motors acknowledged further delays in Endurance production, citing the need to secure “substantially more capital” to meet its initial target of producing 500 vehicles.

Production of the Endurance pickup truck finally commenced in the third quarter of 2022. However, in February 2023, the company issued a recall and halted production due to an electrical-connection issue that could result in a loss of propulsion while driving.

Lordstown Motors Bankruptcy

In June of 2023, Lordstown Motors filed for bankruptcy. The company filing said it had 5,001 to 10,000 creditors and estimated that the company had amassed $100,000,001 to $500 million in assets and liabilities.

The company announcement actually began by detailing a litigation it was filing against Foxconn Ventures Pte. Ltd. whose “Bad Faith and Repeated Contractual Breaches Irreparably Harm Lordstown,” the company said.

“As one of the early entrants to the EV industry, we have delivered the Endurance, an innovative and highly-capable EV with significant commercial and retail potential – and had subsequently engaged with Foxconn in a purposeful, strategic partnership to leverage this expertise into a broader EV development platform,” new CEO Edward Hightower wrote. “Despite our best efforts and earnest commitment to the partnership, Foxconn willfully and repeatedly failed to execute on the agreed-upon strategy, leaving us with Chapter 11 as the only viable option to maximize the value of Lordstown’s assets for the benefit of our stakeholders. We will vigorously pursue our litigation claims against Foxconn accordingly.”

The company said the Chapter 11 bankruptcy was necessary to “Maximize the value of its assets”.