S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20
S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20
S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20
S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20

Beleagured Lordstown Motors May Be Showing Green Shoots, But Use Caution

Thursday, September 23, 2021 | Kate Stalter
Beleagured Lordstown Motors May Be Showing Green Shoots, But Use CautionI'm not usually interested in beaten-down companies, especially those whose injuries are largely self-inflicted, but Lordstown Motors (NASDAQ: RIDE), which caused its own stumbles, may be showing signs of life. 

The electric vehicle maker went public via a SPAC in August, 2020. The stock traded in a somewhat erratic fashion, with wide price swings, hitting resistance below $32 before beginning a long pullback in February.

Shares are down 31.78% in the past three months, and down 65.75% year-to-date.

However, in the past month, the stock is up 31.36, boosted by the August announcement that the beleaguered company named auto-industry veteran Daniel Ninivaggi as its new CEO. Ninivaggi replaces founder Steve Burns, who resigned in June.

Often a new CEO is a catalyst for a company's turnaround. That's certainly what investors in Lordstown, including backer General Motors, are hoping for.

Burns and chief financial officer Julio Rodriguez resigned on the heels of allegations that company executives lied about preorders for electric pickup trucks.

Just a few weeks earlier, Lordstown said it needed additional funding to produce the truck as planned. The firm's auditor also said the company may run out of funds.

When Ninivaggi's appointment was announced on August 26, the stock rallied 17.79%, in trading volume 1,118% heavier than normal.

Other EV Makers Overextended Themselves

EV companies, while heavily hyped, are showing signs of trouble. For example, some factories in China are shuttered, as companies ran short of cash needed to fund production. Sound familiar?

The situation is reminiscent of the excitement surrounding solar stocks in 2005 and 2006. The companies fell along with the broad-market crash that began in late 2007, but some, such as First Solar and SunPower, have yet to regain their late 2007 or early 2008 highs.

Lordstown is a heavily shorted stock. According to MarketBeat data, the short percentage of float is 28.23%. That's pretty high, and could be a signal that the bears may have to scurry for cover soon, after being correct for quite some time.

With the stock continuing to trade in an erratic fashion, it's difficult to characterize the current structure. However, there is perhaps a glimmer of hope in the stock's ability - so far - to hold above its August 19 low of $4.77.

So what else could constitute a catalyst for a turnaround?

In July, the company said asset manager Yorkville Advisors would buy $400 million in shares over three years. Investors sent the stock briefly higher on news of the deal, which could provide the funding for vehicle production.

Yorkville agreed to purchase shares for no less than $7.48 apiece, a 10% premium over where shares were trading Wednesday.

Endurance Finally Rolling Out 

Although General Motors' stake in the company is often mentioned in reports, the automaker owns just 5% of the company. The EV maker planned to manufacture its Endurance pickup trucks in a former GM plant in Lordstown, Ohio, beginning in the second half of this year.

The company recently said the Endurance, with a price tag of $50,000, would go into production this month.

There's plenty of competition, though. Ford's F-150 Lightning is in production. Rivian, which boasts Ford as an investor, postponed its truck rollout but that's also going into production, with more models expected to be on the market early next year. Tesla's CyberTruck, priced at $40,000 for the lowest-end models, is also on deck for 2021.

Make no mistake: Although Lordstown is showing a few tiny green shoots, there's a long way to go before this is a viable investment. I understand it's very tempting to get in early. If that's your feeling, then take a flier on a small number of shares or with a small percentage of your investment capital, and be prepared to write it off. Think of it like that trip to Vegas when you toss a $20 on the roulette wheel at Caesar's, just for fun.

Should you invest $1,000 in Lordstown Motors right now?

Before you consider Lordstown Motors, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Lordstown Motors wasn't on the list.

While Lordstown Motors currently has a "Sell" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The 5 Stocks Here

 


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Lordstown Motors (RIDE)1.2$4.76-3.1%N/A-2.27Sell$8.50
Compare These Stocks  Add These Stocks to My Watchlist 

Free Email Newsletter

Complete the form below to receive the latest headlines and analysts' recommendations for your stocks with our free daily email newsletter:

Most Read This Week

Recent Articles

Search Headlines:
MarketBeat Minute Podcast

Each market day you'll get a one-minute market summary to help you invest wisely.

Subscribe to MarketBeat Minute

Resources

Premium Research Tools

MarketBeat All Access subscribers can access stock screeners, the Idea Engine, data export tools, research reports, and other premium tools.

Discover All Access

Market Data and Calendars

Looking for new stock ideas? Want to see which stocks are moving? View our full suite of financial calendars and market data tables, all for free.

View Market Data

Investing Education and Resources

Receive a free world-class investing education from MarketBeat. Learn about financial terms, types of investments, trading strategies and more.

Financial Terms
Details Here
MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau

© American Consumer News, LLC dba MarketBeat® 2010-2021. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information

© 2021 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer. Fundamental company data provided by Zacks Investment Research.