Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

Lordstown Motors is an EV or electric vehicle company that went public last October through a

spike. They claimed to have designed an electric pickup truck which they call the Endurance.

Their website says that the endurance helps you get out of any sticky muddy or slippery situation,

which might be helpful for some of the senior executives at Lords Town, as they seem to have

found themselves in exactly such a situation.

Unfortunately, the endurance is just a drawing of a truck and not a real truck,

so they'll probably need to use good old-fashioned lawyers

to get themselves out of any sticky situations they find themselves in.

One of the biggest differences between going public by IPO and going public via a SPAC is that

companies that went public through a SPAC merger felt that they could pitch their financial

projections or forward looking statements to investors, while a company that went public

through an IPO was and is not allowed to do this, the

reason for this is that a SPAC initially goes public as a shell company and then merges

with the company that they'll take public.

Because this deal is technically a merger rather than an IPO, SPACS relied on safe harbour laws to make forward-looking

statements. They included projections in their public filings. The idea was that if the projections

turned out not to be true and the stock fell, end investors would have a hard time suing for securities

fraud because of safe harbour rules relating to forward-looking projections from public companies.

Going public via SPAC allowed companies to market themselves to investors based on projected future revenue and income, which may or may not happen. While with an IPO or a direct

listing, companies could only tell investors about their past financial results. If you were an

EV company and good at drawing vehicles but hadn't necessarily built any, it was much more

...