GM, Share Selling & Cutbacks; The Demise of Lordstown Motors (RIDE)

Trade RIDE Stock Your Capital Is At Risk
Ollie Martin
Updated: 3 Mar 2022

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. 

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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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