Lordstown Motors Executives Sold Stocks Before Troubles Came to Light
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Damaging news continues to pile up for electric pickup truck maker Lordstown Motors. Lordstown Motors was an exciting electric vehicle (EV) startup that revived a former General Motors plant in Ohio.
Recently, the Wall Street Journal reported that top executives sold around $8 million in stock just before its poor quarterly earnings report came out. It was also revealed that the prototype of its electric truck caught fire.
The stock sales report is just the latest trouble for Lordstown Motors. The string of bad news has driven Lordstown Motors stock prices under $10 a share by the end of June. Not every automaker who joined the EV market has found success
How much stock was sold by Lordstown Motors executives?
Five Lordstown Motors executives sold stock in early February over three days at over $24 a share, as reported by Wall Street Journal. One of the executives, Chuan “John” Vo, who oversees Lordstown Motors’ propulsion division, sold almost all of their shares for gains of over $2.5 million. Vo was left with 717 shares.
Lordstown President Rich Schmidt netted $4.6 million when he sold 39% of his vested equity in the company. Former CFO Julio Rodriguez and two other executives sold stocks valued between $250,000 and $400,000. This brings the total value of the stocks sold by the group of executives to about $8 million.
CNN reported that on March 17, Lordstown Motors reported a 2020 loss of $100.6 million and only $2.6 million of sales. This was announced about a month after the stock sales and transfers.
In a press release, Lordstown Motors explained the sales were unrelated to the company’s performance. The Wall Street Journal noted that 98% of companies issue a blackout for executives trading stock in the 30 days prior to earnings reports.
Lordstown Motors has faced a series of issues
Lordstown Motors seemed to be riding high in October 2020 when the company announced a merger with DiamondPeak Holdings Corp. DiamondPeak Holdings is a special purpose acquisitions company (SPAC) that helps startups go public.
In January, things started going south when news leaked about their prototype Endurance truck catching fire. The Endurance is Lordstown Motors’ main entry into the EV market. A Hindenburg Research report called into question many of the company’s claims about its vehicle.
Stock prices plunged in March as it began to look less likely the company would be able to begin production. In June, shortly after the company announced it might have to close, founder and CEO Steve Burns and CFO Julio Rodriguez resigned.
The company pushes forward with production
Despite the series of troubling news, Lordstown Motors is moving ahead with production, as reported by the New York Times. The company announced its plans to begin building its Endurance pickup trucks in September with the delivery of the first vehicles in early 2022.
In the wake of the resignations and the stock sale reports, Lordstown Motors invited journalists to the factory to see a beta version in action. The company claimed to have enough pre-orders for electric pickup trucks to drive production through 2022, but in the same week said it had no firm orders.
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