Last week, the electric vehicle company Landstown, warned it may not have enough cash to survive the next 12 months if it doesn’t raise more funding. CEO Steve Burns and CFO Julio Rodriguez then resigned after an investigation found the company had overstated actual customer demand.
Then a few days after all these events happened, the company’s president Richard Schmidt said the company had enough binding orders to take production through the end of next year. Except they weren’t binding orders, the company later had to clarify in a Securities and Exchange Commission filing.
And as it turns out, several executives at the business that went public via merger with a special purpose acquisition company sold their stock shortly before a financial report, with Chuan “John” Vo, who runs the company’s propulsion division, selling 99.3% of his vested equity in February, per the Wall Street Journal.
Certainly Lordstown’s snafus and failures are a sign that many companies that should have stayed private longer and scaled more slowly. They are coming to market before they were ready via a merger with SPACs or SPIVs. Which also means its story is one that will become additional ammo for the SEC to take a harder look at instilling more controls around how such companies report projections.
But what remains more bizarre in all this is perhaps how investors are reacting to revelations that Lordstown misstated demand: Shares of Lordstown are down, yes, but still maintain a market cap of $1.9 billion. The company was valued at $1.6 billion pro forma when its agreement to merge with a SPAC was first announced last year.
This from Term Sheet by Lucinda Shen The bizarre story of Landsdown Motors
|The Saturday Economist|
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