Firstly GM…and now potentially Foxconn. That’s the line of thought distracting Lordstown Motors (NASDAQ: RIDE) buyers in early trading this morning. After posting first quarter earnings this morning, it’s relatively clear that the struggling EV company is still struggling in its tracks; leaving bears to dominate the market as gradual selling continues. After posting a poor Q4 report that outlined huge delivery cutbacks to just 500 vehicles, GM immediately sold their stake; one of the only promising links for bulls. We’re potentially seeing something similar today, as the company’s Q1 report outlines that the manufacturer is on its last legs with its previously agreed deal with Foxconn.
Raising cash is critical for high-growth startups, and Lordstown is no different. The potential partnership with Foxconn has provided the company with a desperate cash injection, but should the deal fall through, LMC will be liable to pay back any payments. The Q1 news today underlines the fact that a deal has to be reached by Saturday.
This hasn’t been the sole weight on Lordstown growth, production has generally been quite slippery following the resignation of CEO Steve Burns regarding misstatements about the forthcoming EV trucks. It’s a problematic landscape for EV company’s currently, but Lordstown has its own unique difficulties.
The highly anticipated rise of the Ford F-150 Lightning means that market share is likely to shrink quicker than initially expected. For a company that is still pre-revenue, it’s not looking up. Lordstown reported an in-line EPS of $0.46, with a net loss of $89.6M over the first quarter. The EV truck maker is continuing to stick with its target production capacity of just 500, down from last-years projection of 31,000.
It isn’t a great time for EV stocks, let alone one that faces dwindling cash flow, is relying on a deal with Foxconn that is potentially about to fall through, and has lost the investment of prominent investor GM. RIDE is currently trading at a premarket loss of 3.5%, continuing yesterday’s 8% sell-off.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage . 68 % of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money .
Oliver is a financial writer and analyst specialising in the US stock market, with years of personal experience in understanding micro/macroeconomic structures, market trends and fundamental analysis.