Lordstown Motors Shares Plunge as Investors See Problems

Soon after, G.M. found a buyer who promised to return auto jobs to the region: Steve Burns, the chief executive of a small electric-van business, Workhorse Group. That company had a rough design for an electric pickup truck and an electric helicopter.

Mr. Burns decided to leave Workhorse to form a new company to make the truck, and he agreed to buy the Lordstown plant for his new venture for just $20 million.

But the deal was announced so hastily — Mr. Trump had said on Twitter of Ms. Barra, “I asked her to sell it or do something quickly” — that Mr. Burns didn’t even have a name for his new company or the money to buy the factory. He turned to a small Cleveland investment bank, Brown Gibbons Lang & Company, and scored an investment from G.M., which provided a $40 million loan for the factory purchase and other expenses.

In August, Lordstown Motors announced that it was merging with a SPAC, DiamondPeak Holdings. That deal, completed in just two months, helped the company avoid the five to seven years it typically takes start-ups to establish a track record for an initial public offering. Tesla, for example, went public about seven years after it was founded.

Ben Axler, the founder of Spruce Point Capital Management, said many companies were being pressured by SPAC backers, known as sponsors, to go public before they were ready. Mr. Axler has bet against shares of some companies that merged with SPACs, though he hasn’t bet against Lordstown.

“We are seeing evidence,” he said, “that SPACs are overpaying for lower-quality businesses.”

Lordstown’s lack of seasoning should have been apparent.

In a presentation to investors, Lordstown indicated that it was relying on partners and suppliers, including Workhorse, for much of its technology and major components. But one partnership has already soured: Karma Automotive has sued Lordstown, accusing it of trying to steal trade secrets and lure away key employees.

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