Key points:
- A once hotly anticipated EV truck maker, things have taken a turn for the worse for RIDE
- Ex-CEO sells $13M of shares, followed by GM's total $75M stake
- The company plan on delivering 500 vehicles this year, short of their 32,000 target
Lordstown Motors (NASDAQ: RIDE) – the burgeoning EV truck maker out of Ohio – looks like it’s on its last legs. Most EV companies face troubled waters in their early high-growth stages. Most are still in them, securing revenue through preorders and assuring investors through clear-cut delivery expectations. On the tail of Rivian and the Ford F-150, Lordstown’s EV truck could have taken the market by force in on an otherwise neglected automobile sector. The reason I say ‘could’ is because Lordstown is seriously struggling at a time when they can’t afford to. It’s make or break, and it looks to be the latter.
Firstly, the EV manufacturer isn’t keeping up with its initial expectations. Sure, you could say the same for a variety of other new EV companies, but that doesn’t make Lordstown any less of a selling target. Releasing its Q4 earnings on Monday, the stock plummeted 16% after the company backtracked its first-year delivery projections by over 31,000 vehicles, issuing a 2022 delivery target of just 500 trucks. This obviously shocked analysts – Goldman Sachs’ revenue expectations were based on 2,250 vehicles in the first year – not even close.
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This was only the first nail in the coffin for Lordstown. A large amount of interest was stirred up following $75M backing from automobile giant GM, so the market didn’t react kindly to the news that GM sold their entire stake following the earnings report. Whether this is a lack of faith in the company, or just a last-ditch attempt at securing cash flow in a very difficult time for GM, the company’s largest, most prominent backer is no more. A day before the GM disclosure, Lordstown ex-CEO also sold around $13.5M worth of shares.
These problems mark the end of a long line of issues that have faced the company including fraud allegations regarding misleading investors. With a stock that has plummeted nearly 90% over the past 52 weeks, delivery numbers not even remotely close to previous expectations, and the loss of the company’s most valuable backer – the demise of Lordstown is underway.
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