Lordstown Motors, the electric vehicle start-up fighting for survival, announced on Monday the resignation of its chief executive, Steve Burns, and chief financial officer, Julio Rodriguez, after the results of a board investigation into an investor’s report questioning the company’s viability and statements about customer interest in its electric trucks.
The resignations are effective immediately, and Lordstown has hired an executive search firm to find their replacements.
The company released the results of an investigation by a committee of its board into a March report by Hindenburg Research, a bearish investor, which took aim at Lordstown shortly after it went public last October.
The committee found the report was “false and misleading” as it pertained to the viability of Lordstown’s technology and its timeline for rolling out vehicles. Still, the company’s report, led by the law firm Sullivan & Cromwell, acknowledged “issues regarding the accuracy of certain statements regarding the company’s pre-orders.”
Lordstown warned last week it did not have enough cash to start commercial production of its electric pickup truck and might have to close its doors. The company has been the subject of an investigation by the Securities and Exchange Commission focusing in part on its merger with a special purpose acquisition company, or SPAC, last October. Sullivan & Cromwell served as an adviser on the merger.
The S.E.C. has sent at least two subpoenas to Lordstown seeking information related to its statements about customer orders for trucks.
The resignations comes just a week before Lordstown was scheduled to host an event at its factory for investors, analysts, customers and partners. The company intended to showcase work on its Endurance electric truck.
Mr. Burns was the driving force behind Lordstown — founding the company just months after he stepped down as chief executive at Workhorse, another electric vehicle company. The company was born shortly after General Motors announced it was shuttering the Ohio factory and struck a deal to finance the sale of the factory to Lordstown.
Lordstown was one of the first big mergers of a start-up with no profits and a SPAC, a holding company that raises money from investors in the hopes of finding a merger partner. Lordstown’s deal with the SPAC, Diamond Peak Holdings, was announced in August and closed just a few months later. The company raised $675 million as part of the merger.
The company said on Monday that it had appointed its lead independent director, Angela Strand, as executive chairwoman while it looks for a permanent chief executive. Becky Roof will serve as interim chief financial officer.
One of the members of the board committee that ordered the law firm’s report was David T. Hamamoto, a sponsor of the Diamond Peak SPAC.
Lordstown, in announcing last week it may not have enough money to survive, also said it had found material weaknesses in it financial reporting system.
Shares of Lordstown plummeted about 15 percent in premarket trading after the news was announced.
After 15 months of pandemic restrictions on businesses and socializing, England is bracing for the news that it must endure another month of restrictions beyond June 21, the date that had been set for the final lifting of Covid rules.
But many analysts say a delay, put in place to get more people vaccinated as the delta variant of the virus continues to force hospitalizations to rise, would only have a minor economic impact.
Prime Minister Boris Johnson is expected to announce a four-week delay on Monday evening to the third phase of reopening, which would have allowed businesses to operate without capacity restrictions, nightclubs to reopen and sports events to fill their stadiums.
“Unless serious restrictions had to be reimposed, the damage to the U.K. economy would likely be minor,” Holger Schmieding, an economist at Berenberg, a private bank, wrote in a note.
“If a delay materializes as reported, we think the economic significance should be minimal,” analysts at UBS wrote. “Especially with vaccine efficacy against the delta strain now proven after two jabs for Pfizer and AstraZeneca.”
The country’s reopening began in April when nonessential retail resumed and outdoor dining was permitted. That month, the economy grew 2.3 percent from the previous month, and was just 3.7 percent smaller than it was before the pandemic. In May, indoor dining opened, events such as weddings could have more guests, and theaters could open with limited capacity, lifting the economic recovery further.
As businesses have learned to adapt to restrictions — for example, as more restaurants have begun offering takeout service — the economic impact of each lockdown has been smaller. Last year, the economy suffered its worst recession in 300 years because of the severity of the impact of the first lockdown in spring 2020. At the start of this year, when most businesses had shut their doors because of the second wave of the pandemic, the economy contracted only 1.5 percent in the first quarter.
The third phase of the reopening has a smaller economic impact than the first two, “so even if it is postponed it shouldn’t have a major impact on the outlook,” analysts at RBC Capital Markets wrote.
But some industries are predicting another heartfelt blow. The Night Time Industries Association, a trade group which represents night clubs and concert venues, said many businesses were already on a “financial cliff edge” and would close without more government support. UKHospitality said the prospects for many businesses were “grim” and urged the government not to delay reopening.
In April, the economic output of the hospitality industry was 40 percent below its prepandemic level and the arts and recreation sector was down by more than 30 percent, the National Institute of Economic and Social Research said.
“Postponing the last step of reopening may delay the recovery in arts and recreation by a few weeks but, if it helps avoid a third wave of infections, it could contribute to sustained recovery in the second half of the year,” Rory MacQueen, an economist at the London-based think tank, wrote.
Elon Musk proved once more that he can shift the price of digital currencies with just a tweet, as he suggested this weekend that Tesla could resume accepting Bitcoin as payment.
The price of Bitcoin jumped in response, bringing it close to $40,000. Other cryptocurrency prices went up as well.
Tesla, the electric vehicle maker that Mr. Musk runs, said in February it would accept Bitcoin for payment, before reversing itself in May over concerns about how much energy is consumed to create new coins and process transactions. The news dragged the market down. (The company continues to hold more than $1 billion in Bitcoin in its corporate treasury.)
In a tweet on Sunday, Mr. Musk said Tesla would change course, again, “when there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend.”
Measuring the environmental impact of Bitcoin processing has always been tricky. Some estimates place the use of renewables in Bitcoin mining at nearly 75 percent, while others put it at closer to 39 percent.
The private equity industry has perfected sleight-of-hand tax-avoidance strategies so aggressive that at least three private equity officials have alerted the Internal Revenue Service to potentially illegal tactics, according to people with direct knowledge of the claims and documents reviewed by The New York Times. The previously unreported whistle-blower claims involved tax dodges at dozens of private equity firms.
But after its staff was hollowed out by years of budget cuts, the I.R.S. has thrown up its hands when it comes to policing the politically powerful industry, Jesse Drucker and Danny Hakim report for The New York Times.
Intensive examinations of large multinational companies are common, but the I.R.S. rarely conducts detailed audits of private equity firms, according to current and former agency officials.
Such audits are “almost nonexistent,” said Michael Desmond, who stepped down this year as the I.R.S.’s chief counsel. The agency “just doesn’t have the resources and expertise.”
Private equity’s ability to vanquish the I.R.S., Treasury and Congress goes a long way toward explaining the deep inequities in the U.S. tax system. When it comes to bankrolling the federal government, the richest of America’s rich — many of them hailing from the private equity industry — play by an entirely different set of rules than everyone else.
One reason they rarely face audits is that private equity firms have deployed vast webs of partnerships to collect their profits. Partnerships do not owe income taxes. Instead, they pass those obligations on to their partners, who can number in the thousands at a large private equity firm. That makes the structures notoriously complicated for auditors to untangle.
Increasingly, the agency doesn’t bother. People earning less than $25,000 are at least three times more likely to be audited than partnerships, whose income flows overwhelmingly to the richest 1 percent of Americans.
An auction winner paid more than $28 million for an 11-minute ride into space alongside Jeff Bezos, on a reusable rocket launched by his space company, Blue Origin. Nearly 7,600 people from 159 countries registered to bid on the flight aboard the New Shepard — its first with passengers — which is expected to launch on July 20 from West Texas. In addition to the winning bidder, who was not identified, and Mr. Bezos, passengers will include Mr. Bezos’ brother, Mark Bezos, and a fourth still-unnamed astronaut. The auction winner’s name will be released in roughly two weeks, according to a video on Blue Origin’s website.
U.S. stocks were poised to climb again on Monday, following gains for most indexes in Europe and Asia. The S&P 500 is set to open 0.2 percent stronger, extending the record high it reached on Friday, futures trading indicated.
This week, investors will be turning their attention to the Federal Reserve, which is holding a policy meeting on Tuesday and Wednesday. Officials have persistently maintained that rising inflation will be temporary and that the U.S. economy still needs plenty of support to recover from the pandemic. But recent data showing larger-than-expected jumps in consumer prices may test policymakers’ resolve.
“Concern that rising inflation will derail the market recovery or lead to sharply higher bond yields is probably misplaced,” analysts at Goldman Sachs wrote in a note. “We think investors should have some confidence that firm inflation over the short-term will not result in a meaningful policy shift,” they added, writing that this would support higher asset prices.
The yield on 10-year U.S. Treasury notes was unchanged at 1.46 percent on Monday.
Elsewhere in markets
Shares in Philips, the Dutch maker of medical equipment, dropped 4 percent on Monday after it recalled some ventilators and other devices to help with breathing, such as those used to treat sleep apnea. The company said that a type of foam used in the machines could have health risks, including causing headaches, respiratory issues and “possible toxic and carcinogenic effects.”
Serco shares jumped nearly 5 percent after the company, a British provider of outsourcing services, upgraded its profit guidance for 2021 by £15 million, to £200 million. It said government contracts to deliver coronavirus testing and contact tracing in Britain will continue for longer into the second half of the year than previously expected.
Lordstown Motors shares fell more than 14 percent in premarket trading after the electric truck maker said that its chief executive officer and chief financial officer have resigned. Last week, the start-up warned that it did not have enough cash to start commercial production of its electric pickup truck.
Engineers and entrepreneurs have spent more than a decade nurturing electric vehicles that can take off and land without a runway.
They believe these vehicles will be cheaper and safer than helicopters, providing practically anyone with the means of speeding above crowded streets, Cade Metz and Erin Griffith report for The New York Times.
That dream, most experts agree, is a long way from reality. But the idea is gathering steam. Dozens of companies are now building these aircraft, and three recently agreed to go public in deals that value them as high as $6 billion. For years, prototypes have been kept hidden from the rest of the world. But now developers are beginning to lift the curtain.
One company is building a single-person aircraft for use in rural areas — essentially a private flying car for the rich — that could start selling this year. Others are building larger vehicles they hope to deploy as city air taxis as soon as 2024 — an Uber for the skies. Some are designing vehicles that can fly without a pilot.
One of the air taxi companies, Kitty Hawk, is run by a Stanford computer science professor who founded Google’s self-driving car project. He now says that autonomy will be far more powerful in the air than on the ground, and that it will enter our daily lives much sooner. “You can fly in a straight line and you don’t have the massive weight or the stop-and-go of a car” on the ground, he said.