Lordstown Motors Stock Drops After Analyst Cuts Rating
LORDSTOWN, Ohio – Shares of Lordstown Motors Corp. closed sharply lower Tuesday after an analyst cut the electric vehicle manufacturer’s rating and slashed its target price.
Morgan Stanley analysts, led by Adam Jonas, cut the EV startup’s rating to underweight from equal weight late Monday and reduced its price target to $2 from $8.
Lordstown Motors’ stock, which trades under the symbol RIDE, fell more than 11% Tuesday to $5.20. On Monday, the company’s stock dropped 10%.
RIDE stock is down 28% over the past five days.
The company announced Sept. 30 that it had reached an agreement in principle to sell its Lordstown manufacturing complex to Taiwan manufacturer Hon Hai Precision Industry, or Foxconn, for $230 million.
However, Jonas cited in his report that the purchase price represents less than 20% of the plant’s estimated value and that the company is likely to encounter rising costs.
Officials said the agreement calls for Foxconn to act as a contract manufacturer for Lordstown’s all-electric Endurance pickup, as well as any future models Lordstown produces.
Under the proposal, Foxconn partner Fisker Automotive, would also manufacture a new SUV out of the plant.
It’s also possible that the market lacks confidence in Foxconn.
Four years ago, Foxconn announced it would invest $10 billion to build a new plant in Mount Pleasant, Wis., that manufacture LCD flat screens and accommodate 13,000 jobs. However, those plans were scrapped earlier this year and Foxconn renegotiated a six-year incentives deal with the community and state that would bring 1,400 new jobs to the region.
The site is still mostly vacant today, and the company has said it still has plans for a project there.
Foxconn’s partner, Fisker, had earlier this year considered the location to build electric vehicles. The proposed agreement with Lordstown, however, indicates that Fisker will build their vehicles in Ohio.
Foxconn also in 2013 promised to build a plant in Harrisburg, Pa. that was never constructed.
The Lordstown plant sale is a much-needed cash infusion for the struggling EV manufacturer, which is making limited pre-production models of the Endurance used for testing, validation and for regulatory approval.
Lordstown Motors’ stock has struggled since March, after a short-seller’s report accused company officials of exaggerating preorders of the Endurance.
Its founder and former CEO, Steve Burns, resigned in June, while the U.S. Securities and Exchange Commission and the U.S. Department of Justice have initiated investigations into the company regarding preorders and its merger with blank-check company DiamondPeak Holdings Corp.
Copyright 2023 The Business Journal, Youngstown, Ohio.