Lordstown Motors Reiterates ‘Going Concern’ Notice

LORDSTOWN, Ohio – Despite entering into an equity agreement last month that could inject an additional $400 million into the company, electric vehicle manufacturer Lordstown Motors Corp. reiterated on Friday that it doesn’t have sufficient cash to fund commercial sale of its flagship product, the Endurance pickup.

The company reported this week that it had $365.9 million in cash as of June 30.

“The company believes that its current level of cash and cash equivalents are not sufficient to fund commercial scale production and the launch of sale of such vehicles,” Friday’s filing said.

In late July, Lordstown Motors announced it had reached an equity deal with a hedge fund managed by New Jersey-based Yorkville Advisors Global. The agreement would allow the fund to purchase up to 35.1 million shares of Lordstown Motors at the company’s direction.

“The actual amount that we raise under this facility will depend on market conditions and other financing alternatives that we are exploring, as well as limitations in the agreement,” the company said in its regulatory filing. “As we seek additional sources of financing, there can be no assurance that such financing would be available to us on favorable terms or at all.

“As a result of these uncertainties, and notwithstanding management’s plans and efforts to date, there continues to be substantial doubt about our ability to continue as a going concern,” the company said.

Shares of Lordstown Motors, which trades under the ticker symbol RIDE, plummeted during morning trading to a 52-week low of $5.05 per unit. By 11:40 a.m. the stock had rebounded slightly, trading at $5.22, down nearly 9% from Thursday’s close.

On Thursday, RBC Capital Markets cut its price target on RIDE stock to $1 from $5 after Lordstown Motors’ second quarter loss widened more than expected, according to an update from MT Newswires. Lordstown Motors has an average investment rating of hold from analysts polled by Capital IQ, with price targets ranging from $1 to $20, MT Newswires reported.

The company first issued its going concern notice June 8 as part of an amended 2020 annual financial report, expressing doubts as to whether it could continue in business for another year.

Lordstown Motors has said that it plans to initiate limited production of the all-electric Endurance by late September, while validation and pilot programs will continue through December and January. Commercial deliveries of the vehicle should begin during the second quarter of 2022.

Copyright 2021 The Business Journal, Youngstown, Ohio.