Lordstown Motors Stock Slumps, Rebounds After Analyst Downgrade
LORDSTOWN, Ohio — Shares of Lordstown Motors Corp. tumbled Monday morning after Goldman Sachs cut the company’s rating from “neutral” to “sell.”
However, the stock found its footing and rebounded an hour later as investors shrugged off the analysts’ downgrade.
Shares of Lordstown Motors stock, which trades under the ticker symbol RIDE, were down nearly 5% during the first half hour of trading Monday after Goldman Sachs published its report.
Shares had fully recovered by noon, posting a 2.8% gain from Friday’s close of $7.57 per share.
Goldman Sachs analyst Mark Delany pointed to several challenges facing the electric-vehicle manufacturer, which plans to begin a limited launch of pre-production models of its Endurance pickup truck this month. The RIDE stock target price remained unchanged at $5.
The analyst cited stiff competition in the growing electric-vehicle space, especially from Ford Motor Co., which has plans to launch an all-electric version of the F-150 in 2022.
Moreover, Ford will compete directly with Lordstown Motors, with both targeting the fleet market. The big difference is that the F-150 is expected to sell at a price point around $40,000, while the Endurance is expected to enter the market in the low $50,000 range.
Goldman Sachs also cited potential supply-chain issues that could hinder production of the Endurance.
Goldman Sachs follows Bank of America in downgrading Lordstown Motors stock. On Sept. 16, analysts led by John Murphy cut Lordstown Motors’ rating from neutral to underperform. The analysts described the electric-vehicle manufacturer as among the “less legitimate” startup EV producers.
Shares of the manufacturer soared nearly 18% Aug. 26 on the appointment of Daniel Ninivaggi after months of declining value. The stock price hit a 52-week low of $4.77 on Aug. 19.
Lordstown Motors’ stock has risen 20% over the last month, but is well below its 52-week high price of $31.57. Year-to-date, Lordstown Motors stock is down 61.8% and is down 31.5% over the past six months.
The U.S. Department of Justice and the U.S. Securities and Exchange Commission have launched separate investigations into the company’s preorder claims for the Endurance and its merger with blank-check company DiamondPeak Holdings Corp. in October of 2020.
In June, Lordstown Motors issued a going concern notice with its amended annual report, stating that it lacked the capital to continue through 2022 unless the company could raise more money. Then on June 13, former CEO Steve Burns and Chief Financial Officer Julio Rodriguez resigned from the company after an internal inquiry found executives had made misstatements about preorders for the Endurance pickup.
Angela Strand was named executive chairwoman in place of Burns and served in that role until Ninivaggi – a former associate of Carl Ichan – was hired.
Copyright 2021 The Business Journal, Youngstown, Ohio.