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Photo: Dustin Franz/Bloomberg via Getty Images

Five top Lordstown Motors executives sold roughly $8 million in stock over the course of three days in February, before reporting end-of-year financial results for the first time as a public company, the Wall Street Journal reports.

The big picture: The electric-vehicle startup went public via SPAC last year at a $1.6 billion valuation, despite having never made or sold one of its vehicles. It reported losses in March that were more than double analyst expectations, according to the Journal.

  • In March, Hindenberg Research accused Lordstown of faking its pre-order information. The company acknowledged that some of the statements regarding pre-orders were inaccurate, but denied the rest of the allegations included in Hindenburg's report, per WSJ.
  • Earlier this month, Lordstown said it did not have enough money to begin production, before walking that statement back. The troubled company's stock is down nearly 50% over the past six months.

What they're saying: An analyst at InsiderScore, Max Magee, told WSJ of the stock sales, “We wouldn’t expect insiders to typically sell at that time in the quarter.”

  • A special committee formed by Lordstown's board said it looked into the sales and concluded they “were made for reasons unrelated to the performance of the company.”
  • “At best, it suggests the company has weak internal control over the trading of their officers,” Daniel Taylor, an accounting professor, said.

Our thought bubble via Axios' Felix Salmon: "Lordstown Motors went public via SPAC, a process that involves much less disclosure than a normal IPO. The latest revelations only serve to underscore the narrative that in such companies, public shareholders are the patsies while corporate executives can trade with much more information and insight into the true state of the company."

Go deeper: Unpacking the Lordstown Motors fiasco

Go deeper

Updated Aug 18, 2021 - Axios Events

Watch: A conversation on how and why companies go public

On Wednesday, August 18, Axios hosted a virtual event discussing how and why companies go public. Axios markets reporter Courtenay Brown and business editor Dan Primack hosted one-on-one conversations with Nasdaq Stock Exchange President Nelson Griggs, Benchmark general partner Bill Gurley, and Cooley Partner & Co-Chair of Global Capital Markets David Peinsipp.

Bill Gurley unpacked the marked increase in companies going public, the issues inherent in the traditional IPO process, and his take on SPACS.

  • On his problem with traditional IPOs: “We are using a remarkably un-innovative, unsophisticated process by which to price and allocate shares in the public markets, and it's gotten worse over the past 20 or 30 years.”

His thoughts on the rise of SPACs: “I think the whole reason the SPAC thing opened up is because of the broken IPO process. In 2020, the average IPO was underpriced by 50 percent…. We have the lowest interest rates of all time. Why would anyone subject themselves to a 50 percent cost of capital? That's what created this window for SPACS.”

Nelson Griggs discussed the new landscape for going public, shifts in the IPO process since the pandemic, and the health of the IPO market.

  • His thoughts on the new reasons for going public: “Companies are staying private a lot longer than they used to because there's very easy access to capital and liquidity as a private company. Companies used to go public for raising capital liquidity, but now it's more because of the brand. They want to be known as a public company.”
  • On the ways going public has changed since the pandemic: “One of the coolest parts about going public is when companies end up at Nasdaq and they ring the bell there.... Pre-pandemic that was reserved for maybe one or two hundred people…. We're seeing the ability to make this a much more inclusive event.”

Axios Chief Revenue Officer Fabricio Drumond hosted a View from the Top segment with Cooley partner and Global Capital Markets co-chair David Peinsipp, who discussed the current IPO market and predictions for the future of going public.

  • “This will go down as a banner year for capital markets all around, including IPOs. And the pipeline right now is about as strong as I've seen it, particularly in tech, life sciences and consumer. I expect all of those areas to really pop in the back half of this year and going into 2022.”

Thank you Cooley for sponsoring this event.

Breaking Biden's diplomatic logjam

Expand chart
Data: Center for Presidential Transition via Congress.gov; Chart: Will Chase/Axios

The logjam for reviewing and confirming President Biden's ambassadorial picks is finally starting to break.

Why it matters: Biden is far behind his predecessors in the rate at which his ambassadorial picks have been confirmed. The Senate Foreign Relations Committee will hold a series of high-profile hearings and votes this week to finally begin chipping away at the backlog.

14 mins ago - Politics & Policy

Democrats brace for staredown over paid family medical leave

House Ways and Means Committee Chairman Richard Neal. Photo: Win McNamee/Getty Images

Senior House Democrats are braced for battle with the Senate over whether paid family medical leave — a key priority for progressives — will be included in President Biden’s final budget reconciliation bill, lawmakers and aides tell Axios.

Why it matters: Sen. Joe Manchin (D-W.Va.) has indicated he wants to cut the program to reduce the bill's price tag. “Paid family and medical leave must be in the final package,” Rep. Richard Neal (D-Mass.), chairman of the House Ways and Means Committee, told Axios on Monday.

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