Lordstown Motors’ Stock Plunges in Wake of Earnings Report
LORDSTOWN, Ohio – Lordstown Motors Corp.’s stock took a sharp hit during premarket trading on Tuesday and continued to struggle through midday, as investors grappled with the electric-vehicle startup’s first quarter financials released late Monday.
Lordstown Motors, which trades under the ticker RIDE, saw its share value decline more than 12% to $8.49 per unit by noon, according to its NASDAQ listing.
The company said Monday that it would cut its 2021 production target by half and would need to raise additional capital to complete its business plans.
Lordstown Motors reported a net loss of $125 million during the first quarter.
Lordstown Motors is in the process of retooling the former General Motors Lordstown Complex to produce the Endurance, an all-electric, full-size commercial pickup truck. The plant has produced 48 of 57 beta models of the vehicle and plans to manufacture pre-production models this summer.
The company plans to launch the first market-ready Endurance in late September.
CEO Steve Burns told analysts during a conference call Monday that the company needed additional cash to fully execute its business plan for 2021.
“Our research indicates a very robust demand for our vehicles,” Burns said. “However, capital may limit our ability to make as many vehicles as we would like.”
Burns said the initial forecast was to build 2,200 Endurance pickups by the end of 2021. Without a new infusion of cash, the company would be forced to limit production to about 1,100 vehicles, he said.
Burns said that higher than expected costs associated with supply chains, engineering resources, parts and equipment, and shipping costs presented challenges to the company.
Lordstown Motors is pursuing funding through the federal government’s Advanced Technology Vehicle Manufacturing Loan program. Earlier reports indicated that the loan could be as much as $200 million.
Burns also said that the company was in early-stage discussions with “large strategic investors” to raise capital for the venture.
Lordstown Motors’ stock has struggled to find footing since March, after a short-seller’s report accused the company of fabricating many “pre-orders” of the Endurance, and alleged the company had misled investors. The report was followed by a disclosure from Lordstown Motors that the U.S. Securities and Exchange Commission had initiated an investigation into its pre-orders and its merger with DiamondPeak Holdings Corp.
Lordstown Motors merged with DiamondPeak, a special purpose acquisition company, or SPAC, in October. Lordstown Motors was listed on NASDAQ under the RIDE symbol Oct. 26.
Burns said he could not address the short-seller’s report on Monday, but said the company would provide a full response before it released its second-quarter earnings. He also reiterated that the company was cooperating with the SEC inquiry.
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