This could be the beginning of the end.
Lordstown Motors is in trouble. There's no other way to say it. The Ohio-based electric truck company is now being investigated by the Justice Department. The Wall Street Journal cites anonymous sources claiming the investigation against the EV truck start-up "is being handled by the US attorney's office in Manhattan and is in early stages."
Lordstown's troubles began a few months ago following the publication of a short-seller report that provided evidence the company mislead investors regarding the truck's capabilities and the number of pre-orders. The Securities and Exchange Commission (SEC) had already been quietly investigating the company but Hindenburg Research's report made things public. Things continued to go downhill from there.
In April, Lordstown was caught for not paying real estate taxes and, a few weeks ago, came the resignation of its CEO and founder, Steve Burns. CFO Julio Rodriguez also abruptly resigned. Following the Journal's report, Lordstown shares took a hit on Friday, falling 17 percent. A company spokesperson acknowledged the fed's investigation and vowed full cooperation.
"Lordstown Motors is committed to cooperating with any regulatory or governmental investigations and inquiries. We look forward to closing this chapter so that our new leadership - and entire dedicated team - can focus solely on producing the first and best full-size all-electric pickup truck, the Lordstown Endurance."
As of now, plans remain in place for production of the Lordstown Endurance, a direct rival to the Ford F-150 Lightning, to begin in September. The likelihood of that happening doesn't sound too good right now. Aside from the dual SEC and the Justice Department investigations, Lordstown is hurting for cash. Not long ago it confirmed it won't survive much longer without additional emergency funding, though that was before Burn's resignation. His actions were specifically called out in Hindenburg's report, which could scare away future investors.
Now that he's out of the picture, new things might be possible. Time will tell.