Electric Last Mile Solutions plunges after top execs leave in wake of board investigation

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Electric Last Mile Solutions (NASDAQ:ELMS) is in freefall after the company's CEO and board chairman have resigned following a special committee investigation into certain sales of equity securities made individuals associated with the EV startup. The board also concluded that the ELMS' previously issued consolidated financial statements will need to be restated.

Based on the special committee’s investigation, the company concluded that in November and December 2020, shortly before the company’s December 10, 2020 announcement of a definitive agreement for a business combination with Forum Merger III Corporation, certain Electric Last Mile executives purchased equity in the company at substantial discounts to market value without obtaining an independent valuation.

On Wall Street, Cowen dropped its rating on Electric Last Mile Solutions (ELMS) cut to Market Perform from Outperform. BTIG lowered its rating to Neutral from Buy. D.A. Davidson cut its rating to Neutral from Buy. Wedbush Securities also lost confidence with a ratings move to Neutral from Buy.

Shares of Electric Last Mile Solutions (ELMS) fell 31.85% in premarket action to land at $3.81. The 52-week high for ELMS is $13.26. See the advanced chart.

Comments

[Flipp]

No surprise about CEO, he never stays in one job very long, he lost the job at Karma due to Poor performance, that says it all

[panther14]

Why do people buy on the first day of a drop? They 99% of the time drop further....

[Matthew J White]

@panther14 you were not wrong

[Blueper]

James Taylor: whispers softly "it's homologation" on his way to federal prison
Jason Luo: whispers softly "it's omologazione" on his way to federal prison
twelve years and four years (Luo is gonna squeal)

[ribana75]

I'll be buying at this dip

[echochristopher]

I suppose if you invested because you liked James Taylor's experience, this would rattle you.
If you invested, like I did, because this company has a huge first mover advantage in a new market (class 1 EV vans), this doesn't change anything but make another buying opportunity.
The company guidance was 300-500 sales in Q4 2021 and 19k vehicle sales in 2022, which translates to over $650m in revenue. At $25m quarterly burn, just a 15% margin per vehicle makes them cash flow positive.
Valuation at $3.66 per share is $453m.

[spamoi]

@echochristopher Competition is coming fast and hard though...

www.ford.com/...

gmauthority.com/...

[echochristopher]

@spamoi Different markets. GM and Ford's EV vans are bigger and have a 50% higher price

[spamoi]

@echochristopher Yeah it seems to be at the same size of a RAM Promaster van, which will be only available in 2023 in EV form.
So yeah, they have about a year to get their stuff straight up...
Wish to see some reviews and comparison soon!

[JohnsonTV]

Before I sell anything, I ask myself, “Are the chances better or worse from here that this stock will outperform the market?” The decision has little to do with how it’s done since I bought it.

[Lord TGO Investment]

Hmm, and the SEC dares to request information on how Bitwise will handle fraudulent activities…how are they not involved in this case?!?

[johnny inca]

worth a gamble at 3.5 to hold through 1st earnings update to get the facts

[johnny inca]

@johnny inca stopped out.

[sitecast]

So disappointed in these rat f*cks. This is exactly the type of thing that makes me want to never invest in stocks again, and just stick to RE that I can control, see, touch, smell, etc. Oh well, lesson learned. Not sure what to do here, I have a sizeable position...shame on me!

[Marcipanzerfaust]

@sitecast I would just hold on to those shares. It's a shame this happened, but as of of now the only thing we know is that 7.8M shares will be surrendered no later than April 11. Thus the outstanding share count will be reduced by 7.8M (>6% of the outstanding shares).

[fredgwynn]

@sitecast why don’t you invest in REITS instead of tech startups?

[sitecast]

@fredgwynn
I work in RE and have plenty of exposure to that sector via my own deals and friends and family investments. And, I don't just invest in startups...in fact, this is one of 2 I own...but thank you for the advice...may it always be sunny in your neighborhood.