Lordstown faces SEC, Nikola shareholder Hanwha sells down

Yahoo Finance’s Julie Hyman, Myles Udland and Brian Sozzi discuss Lordstown’s disclosure of an SEC probe and Nikola taking a hit amid Hanwha’s cut in stake sells.

Video Transcript

MYLES UDLAND: Let's take a look at shares of Lordstown Motors. Ticker is RIDE, R-I-D-E, recent entrant into the electric truck space, off about 10% today. Brian Sozzi, company out with its latest-- don't call them earnings. We'll call them quarterly results-- last night, responding in part to that short-seller report from Hindenburg. But some messaging issues here for Lordstown, it seems.

BRIAN SOZZI: Right off the bat. You know, first, I think we have to start off with Steve Burns, the chairman, founder, and CEO of Lordstown Motors on another network this morning, saying, hey, you know what? The preorder numbers that we put out there, that 100,000 figure, which he threw out here on Yahoo Finance just a couple weeks ago, he effectively is saying, shouldn't have believed those numbers. Nobody actually thought that they were preorders. But why would you mentioned that you had 100,000 preorders? Why would you come on our network and say stuff like that?

And to your point, Myles, in the break, this is going to be part of the learning process not only for Lordstown Motors, but a lot of other specs. You have to be very, very careful what you're saying when you're a public company, especially not just on earnings calls, but in live interviews. But, again, looking over this quarter-- and that's just my first bullet point here-- nowhere in that Lordstown call yesterday-- and I guess we know why now-- did they mention that key 100,000 preorder number that Burns has been mentioning really consistently in recent months.

So that is a number that, I guess, could be completely scrapped, and tossed in the trash, and no longer believed. They do not have 100,000 preorders. It's unclear how many preorders they in fact have, if any at this point.

Next up, they have been-- an SEC inquiry has now landed on the doorsteps of Lordstown Motors. Obviously that is not good any time you see that, especially for a company with no revenues, no profits, high losses, and now questionability on the credibility of the management team when you come on here with statements like that that are absolutely ridiculous. And last but not least, on the conference call, you had Burns talk down the potential on Lordstown selling directly to consumers. They remain very focused on selling to fleet customers.

Again, it's unclear when those preorders will start. He says the appetite for those preorders is very strong. Nonetheless, focusing on fleet customers.

Also worth mentioning-- I put this in here. They have really struck a deal with Camping World. As you know, that Camping World is an RV retailer, outdoor retailer founded by Marcus Lemonis.

They are working with them to establish service stations to help service these vehicles if and when they eventually hit the road. Burns also reiterated last night on the call they are going to start making the endurance pickup truck in September. So at least that goal was reiterated.

MYLES UDLAND: Yeah. And, you know, Sozz, that's all fine and well, those long-term projections. That's great when you're not a $2-billion publicly-traded company and there's expectations put on you as a result of that. Speaking of other companies that are public with multibillion-dollar valuations and now questions about how we're gonna get there, Nikola, Julie. Some news there about one of their largest shareholders-- or a large shareholder in the business-- selling down some of their stake.

JULIE HYMAN: Yeah. I mean, you always talk about this sort of life cycle of where we are in the SPACs. Nikola's a little bit further along in terms of the questions about its credibility, right? Because it had a short-seller report and then had to come out with some revelations, also ousted its original CEO.

So South Korea's Hanwha Group is the one that says it's going to be liquidating half of its holdings. So 50% of its current stake would be about 11 million shares. It's worth about $175 million at current share prices.

And this, again, had been not just an investor, but a strategic investor. This is a conglomerate based in South Korea. And so it's an interesting move here. You see the shares are down another 5% today. And this is another one that has just been battered, Myles.

MYLES UDLAND: Yeah. And just, you know, a reminder-- I'm sure our viewers are familiar at this point. We talk about SPACs so often. When a SPAC sponsor comes to market, they price all the shares at $10. And then the stock trades from there.

So you see these stocks in the mid teens. If you bought the IPO, you bought it at $10, then you're up about 50%. Of course, many of the shares in a Nikola, in a Lordstown, in many of the others have traded hands many, many times at significantly higher prices than where we're trading today.

And so I think that is sort of where the investor confidence question comes from. Why was the stock, you know, at $40, $60, $25 even, if now we're gonna, you know, kind of get back to basics at that $10-ish $10, $12, $13 per share level? So it's nice, simple math for trying to keep track of where these SPACs go.

When we start to see a whole wave of them move down into the single digits, then you're gonna know you're gonna have real problems. Then everybody who got in on [INAUDIBLE] or all the friends who got the little wink and nod, hey, you want to buy this thing, then they're in trouble too if they haven't already gotten out. And then I think things start to get really interesting for the space in general, you know, leaving out any individual stories that crop up along the--