Shares of electric heavy-truck maker Hyzon Motors (HYZN -0.15%) opened sharply lower on Wednesday after the company disclosed that it is a target of a Securities and Exchange Commission (SEC) investigation and said that its 2021 revenue and margins would fall short of its prior guidance.
Hyzon's shares fell over 10% in early trading today, but had recovered somewhat by 10:15 a.m. ET, when they were down about 5.6% from Tuesday's closing price.
Hyzon said in a regulatory filing on Wednesday morning that it had received a subpoena from the SEC for documents and information related to allegations made by a short-selling firm in September.
That firm, called Blue Orca Capital, alleged in a report on Sept. 28 that Hyzon had announced deals with customers that were actually shell companies, that it had inflated its revenue and other financial projections ahead of the merger with a special-purpose acquisition company that took it public in July, and that it was simply a repackaged version of a struggling Chinese fuel-cell maker.
To be clear, right now these are allegations. But electric-vehicle investors will recall that similar short-seller allegations against Nikola (NKLA -14.29%) and Lordstown Motors (RIDE 3.34%) turned out to be largely true. Both companies ended up firing their CEOs, and both companies' stocks took very heavy hits.
Clearly the fear here is that Hyzon could turn out to be a similar situation. That's why the stock is down today.
While it's true that the Nikola and Lordstown cases didn't end well, it's also true that the SEC's document request was probably made with those examples in mind.
Put another way, given what happened to Nikola and Lordstown, it's not surprising that the SEC has decided to take a closer look at Hyzon, just in case.
I'm not a Hyzon shareholder. If I were, I wouldn't panic quite yet. But I'd be watching carefully, and you should be, too.