Lordstown Motors Endurance

Lordstown Motors Shares Stabilize After Filing

LORDSTOWN, Ohio – Shares of electric-vehicle manufacturer Lordstown Motors Corp. stabilized Wednesday, one day after the company said in a regulatory filing that it had “substantial doubt” about remaining in business through next year unless it raises plenty of cash.

Analysts and online investing communities mostly shrugged off the report, noting that much of the information had already circulated through previous comments and company filings with the U.S. Securities and Exchange Commission. 

“The company believes its current level of cash and cash equivalents are not sufficient to fund commercial scale production and the launch of sale of such vehicles,” Lordstown Motors stated in its amended 10-K filing Tuesday.  “These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of at least one year” 

Although earlier filings contained similar language, they did not include blunt statements regarding the possibility of closing its doors in a year. Still, the report sent Lordstown’s stock value plummeting by more than 16% Tuesday and gave up more ground in after hours trading.

However, investors shook off most of the damage Wednesday. Lordstown Motors, which trades on Nasdaq under the ticker symbol RIDE, closed flat at $11.23, up a penny from the closing bell the previous day.

Bank of America maintained its neutral rating on Lordstown Motors in the wake of the filing, according to the investment website Seeking Alpha.  

The website quotes Bank of America analyst John Murphy saying that the disclosure in Lordstown Motors’ latest filing is little surprise given earlier comments made by CEO Steve Burns during a conference call with analysts May 24. 

Burns said the company would slash production of its inaugural vehicle, the all-electric Endurance pickup, by half in 2021 if it could not secure additional capital. 

While the latest filing may indicate that the company has yet to secure financing and is in need of cash, Murphy touted Lordstown Motor’s assets such as the former General Motors Lordstown plant, which it acquired in November 2019.

Lordstown Motors is retooling the plant to begin limited production of the Endurance in late September. 

“Nevertheless, with significant asset value, management focus on securing capital, and still widely available capital for AutoTech entrants, we are hesitant to draw a conclusion that RIDE will not be able to line up additional funding,” Murphy’s note said, according to Seeking Alpha.

“We intend to bring capital in,” Burns said May 24. One of the opportunities the company is pursuing is financing through the federal government’s Advanced Technology Vehicle Manufacturing loan program. 

The federal program helped early stage EV companies such as Tesla establish themselves. Previous reports suggested the automaker is seeking at least a $200 million loan through the program.

U.S. Rep. Tim Ryan, D-13, who has repeatedly fought to keep the program intact, said his office would continue to help the company where it can.

“Undoubtedly, the news coming out of Lordstown Motors is concerning, and while I will continue to use my position to assist them wherever possible, it is important to remember that they are one piece of a larger movement transforming our region into what has been coined as Voltage Valley,” the congressman said in a statement. “Between the amazing work being done at Brite Energy Innovators; the Ultium Cells LLC electric battery plant in Lordstown, which will be up and running early next year and is slated to create 1,100 new high-tech jobs; and the numerous companies in the electric vehicle supply chain that the Youngstown/Warren Regional Chamber is currently aiding, our community is still leading the jobs of the future.” 

Lordstown Motors said in its latest filing that it is evaluating various funding alternatives and “may seek to raise additional funds through the issuance of equity, mezzanine or debt securities, through arrangements with strategic partners or through obtaining credit from government or financial institutions.”

The company also said it would consider joint ventures “to further our business purposes.”

However, the company warned “there can be no assurance that such financing would be available to us on favorable terms or at all.”

As a result, shares of RIDE plummeted more than 16% at the market close on Tuesday and fell another 11.5% in after hours trading. The stock had been trading as high as $15.72 in the afternoon, but by 4:30 p.m. that day, share prices had fallen to $9.92. 

Lordstown Motors submitted an amended 10-K filing after it adjusted its 2020 earnings report because of new guidelines issued in April by the SEC. Lordstown Motors went public in October through a merger with special purpose acquisition company DiamondPeak Holdings Corp. The new guidelines reclassify stock warrants issued at the time of the merger as debt and not equity.

The latest regulatory filing was submitted the same day Lordstown Motors announced it would host “Live From Lordstown,” a virtual tour and preview of the startup electric vehicle manufacturer’s operations on Friday, June 25.

The event caps off “Lordstown Motors Week,” a five-day open house the company has planned for institutional investors, analysts and media during the week of June 21.

Copyright 2021 The Business Journal, Youngstown, Ohio.