What happened

Shares of electric-pickup start-up Lordstown Motors (RIDE -4.37%) were down sharply on Wednesday, a day after the company warned in a regulatory filing that there is "substantial doubt" about its ability to continue as a going concern.

As of 1:30 p.m. EDT, Lordstown's shares were down about 10.6% from Tuesday's closing price and had fallen about 36% since the release of the filing on Tuesday afternoon. 

So what

In a revised version of its 10-K annual report filed with the U.S. Securities and Exchange Commission (SEC) on Tuesday afternoon, Lordstown for the first time warned investors that it might not have enough cash to stay in business for another year.

The warning, inserted by the company's auditors and known as a "going-concern" notice, spooked investors -- and rightly so. This is a company that only a few months ago was confident that it would be able to begin shipping its first product, the Endurance electric-pickup truck, before the end of this year.

But Lordstown now is reeling from two separate blows that might have put it close to a knockout. 

A prototype Lordstown Endurance, an electric pickup truck.

Lordstown was hoping to beat Ford to market with its electric Endurance pickup. Now, investors are wondering if the Endurance will get built at all. Image source: Lordstown Motors.

First, a report by noted short-seller Hindenburg Research alleged in March that the company had greatly exaggerated the number of preorders for the Endurance. Because the Endurance is designed for commercial-fleet use, the apparent purchase commitments from big fleet operators were critical to the bull case for the stock. 

While the allegations are so far just allegations, Hindenburg does have a good track record, and the evidence it supplied with its report was enough to trigger an SEC investigation. 

Second, Ford Motor Company's (F 0.08%) reveal of its electric F-150 Lightning last month undermined much of what was left of the bull case for Lordstown's stock. Ford plans to offer a special variant of the Lightning, called Lightning Pro, tailored to the needs of commercial-fleet customers -- with a starting price more than $10,000 below the Endurance's and with features that will help fleet operators easily integrate it into existing (internal combustion) Ford fleets. 

The going-concern notice made it official. But for auto investors who have been paying attention, Lordstown was already on the ropes.

Now what

The fact that Lordstown seems to still have roughly $300 million in cash makes me think that there may be more to the story. It's possible that some of the orders that Lordstown did have were cancelled after Ford revealed the Lightning. It's also possible that the company's finances are shakier than the apparent cash balance suggests for reasons we don't know yet. 

Either way, I don't think there's much upside left in this one. But there's still quite a bit of potential downside left as I write this on Wednesday afternoon. Trade carefully.