Shares of Lordstown Motors (RIDE -9.65%) were down sharply on Monday morning, after the company said that its CEO and chief financial officer had resigned following an investigation by the board of directors.
As of 10:15 a.m. EDT today, Lordstown's shares were down about 20% from Friday's closing price.
Lordstown said on Monday morning that CEO Steve Burns and CFO Julio Rodriguez have resigned from the company effective immediately. The trigger? A committee of independent board directors found that one of the key allegations made by short-seller Hindenburg Research -- that Lordstown had exaggerated the number of pre-orders for its Endurance electric pickup truck -- had merit.
Lordstown's shares were hit hard last week after the company said in a regulatory filing that it might not have sufficient cash to stay in business for another year. The disclosure, known as a "going concern" notice, was inserted by the company's auditors in a revised 10-K annual report that also noted that the company's financial controls in 2020 had not been adequate.
Although the independent directors' report concluded that some of the other allegations made by Hindenburg in March were not accurate, the validation of auto investors' concerns about the company's pre-orders -- and the resignation of Burns, until now the public face of the company -- were enough to trigger today's sell-off.
Lordstown said that Angela Strand, a former Workhorse Group (WKHS -10.31%) vice president who has been serving as an independent director, will lead Lordstown on an interim basis while it searches for a permanent CEO. AlixPartners' Becky Roof has agreed to serve as Lordstown's interim CFO.