Shares of Electric Last Mile Solutions plummeted Wednesday by more than 50% after the EV start-up’s chairman and CEO both unexpectedly resigned.
The company late-Tuesday said ELMS CEO James Taylor and Chairman Jason Luo resigned from their positions, effective immediately, after an internal probe of share purchases made by the co-founders before it went public through a special purpose acquisition company in June.
The controversy is the latest for EV start-ups that went public though SPAC deals. Other problems have led to similar executive outings as well as investigations by the Department of Justice and Securities and Exchange Commission.
Shares of ELMS were down by as much 53% during intraday trading Wednesday before closing at $2.71 a share, down by 51.5%.
ELMS said an internal investigation by a special committee of the board found that shortly before the company announced an agreement to go public in December 2020, some executives, including Taylor and Luo, purchased equity at substantial discounts to market value without obtaining an independent valuation.
The stock was downgraded by several equity analysts Wednesday including Cowen’s Jeffrey Osborne and D.A. Davidson & Co.’s Michael Shlisky. Both cited the loss of experienced executives rather than any internal problem with the company for the downgrades.
ELMS declined to comment more about the investigation outside of its press release and a public filing to the SEC.
Taylor and Luo will maintain consulting roles with ELMs, according to the release.
Board member Shauna McIntyre, a former chief of staff at Google’s consumer electronics division, was named interim CEO. Brian Krzanich, former CEO of automotive retail software provider CDK Global, was named chairperson.
– CNBC’s Michael Bloom contributed to this report.