Lordstown Motors Analyst On CEO Departure: 'Interim C-Suite Team Appears To Be An Upgrade'

Lordstown Motors Corp RIDE shares dropped another 16.2% on Monday after the company announced its CEO and CFO are resigning from their positions effective immediately.

What Happened? CEO Steve Burns and CFO Julio Rodriguez  resigned from their positions just days after the company warned investors that it has “substantial doubt” that it will continue as a going concern for another 12 months without raising additional cash to bring its electric Endurance truck to the market.

Why It’s Important: Lordstown went public in October 2020 after completing a SPAC merger. Roughly eight months later, Lordstown shares are now in a freefall, down 28.5% since last week’s filing.

On Monday, Bank of America analyst John Murphy said Lordstown is sending a mixed signal by announcing the resignation of top executives on the same day the company announced the results of a special committee investigation into charges made by short seller Hindenburg Research released back in March.

On Monday, Lordstown said the investigation revealed Hindenburg’s report is false and misleading in many of its claims, including challenges to the viability of Lordstown’s technology. Lordstown has previously admitted to issues with statements made by the company about its vehicle pre-orders.

Related Link: Lordstown Motors Analysts React To Going Concern Warning: 'These Conditions Raise Substantial Doubt'

Murphy said the executive resignations may have more to do with securing desperately needed capital than punishing management for wrongdoing uncovered during the investigation.

“It is a conflicting signal to us that the management change was announced along with the Special Committee’s somewhat exonerating conclusions on the short seller report and ahead of Lordstown Week (June 21-25), at which the company will be touring investors, analysts, customers, and partners through its plant,” the analyst said.

However, Murphy said the appointments of Angela Strand as interim CEO and Becky Roof as interim CFO could be good news for the company’s near-term outlook and might be a “perceived positive for additional capital” the company desperately needs.

“This interim C-suite team appears to be an upgrade, and may play well as the company seeks sources of new capital.”

For now, Murphy maintains a Neutral rating and $13 price target for Lordstown. He said Lordstown is well-positioned to benefit from the electrification of the global auto industry, but it is just one of a number of large and growing competitors in the space.

Benzinga’s Take: For now, the major catalyst Lordstown investors are waiting on is any news that the company has successfully raised the capital it needs to ensure it gets Endurance to market.

It appears the company’s internal investigation didn’t uncover any major new skeletons, but the stock is far from a safe bet at this point.

White House photo.