Cash-starved Lordstown Motors is in financial trouble and might soon be history.
Lordstown Motors Corp. is an electric truck startup that went public last year through reverse mergers with special-purpose acquisition companies (SPACs). It gained the public’s attention with its Endurance pickup, and investors started flocking to the company for its powerful offering that promised 600 hp and 250 miles of range at a highly competitive price bracket (under $55,000). And most importantly, the company wanted to take on Tesla’s Cybertruck.
However, a recent filing to the Securities and Exchange Commission states otherwise. Lordstown Motors is left with just $259.7 million as of March 31 after a net loss of $125.2 million in the last three months. Furthermore, the company is unlikely to commence manufacturing and could eventually wither away in the next 12 months.
Since March, the company has been in the spotlight for mostly not-so-good reasons. It was first accused of faking pre-orders and not paying taxes, to which the company replied it was cooperating with relevant authorities. Then, the Endurance’s first test drive resulted in a disaster, as the prototype truck caught fire due to human error.
Lordstown’s chance of staying afloat depends on its ability to finish the construction of the truck, acquire regulatory permission, start mass manufacturing, and commence sales. In short, to get out of trouble, Lordstown Motors needs more funding.
On Tuesday, the company’s stock closed at $11.22, down from the opening price of $15.50, and went further down another 20 percent the next day. Unfortunately, troubles just don’t end here as Lordstown is on the verge of getting delisted from the Nasdaq exchange since it took too much time to file its quarterly report with the Securities and Exchange Commission.
General Motors sold Lordstown, an eponymous facility, back in 2019 and is a majority shareholder in the company as well. Lordstown Motors has 600 employees and the only way they could survive is to begin production at the 6.2 million square foot factory. A company spokesperson said Lordstown is on track to start operations at the plant by the end of September. If the company manages to secure extra funding, it might make a comeback very soon—but it won’t be easy!
To be continued…
