Wall Street remains worried about Lordstown Motors Corp. ‘s cash burn and production risks, with one analyst slashing his price target on the electric-vehicle maker’s stock to $1 and warning that the electric truck maker could run out of cash by year’s end.
Lordstown RIDE late Wednesday reported a wider quarterly loss than analysts expected, but the stock rallied as investors cheered the company’s promise to start “limited production” of its Endurance electric pickup truck by next month. The stock rose again on Thursday, chipping away at weekly losses of around 2%.
The electric-vehicle maker in June added a “going concern” warning to regulatory filings, following the departure of top executives and doubts over its order book, with the company clarifying that orders were not binding.
Without additional capital, the company runs out of cash by year-end, RBC analyst Joseph Spak said in his note Thursday. It does have a $400 million line of credit and thus “some flexibility” and presented some options, “but we can’t recommend investors get involved until a clearer strategic and financial picture emerge,” he said.
Spak slashed his price target on the shares to $1, from $5, representing a downside of more than 80% from Thursday’s prices. He also significantly lowered his sales forecast to a peak of 7,500 in 2025, from a previous forecast of sales peaking in the mid-40,000 by that year.
“Management needs to issue new roadmap that will come, with time. But until then, we’d stay away,” he said.
Lordstown said Wednesday the commercial deliveries of its Endurance pickup truck were pushed back to the second quarter of 2022, meaning the company would miss a first-mover advantage as both Ford Motors Co.
and General Motors Co.
will have launched electric pickups by then, Spak said.
Emmanuel Rosner at Deutsche Bank also lowered his price target on Lordstown following earnings, to $7 from $8, echoing some similar concerns about the company’s ability to execute its plans.
The “imminent start of production in September and what appears to be a defined path toward ramping volumes afterwards” was encouraging, he said.
“Overall, though, we continue to see considerable risk and uncertainty towards a
volume ramp-up. Nearest term, Lordstown is in need of additional capital,” he said.
“But more fundamentally, the company is still facing considerable operational risk as it works to validate its proprietary hub-motor technology, generate fleet customer demand, manufacture and sell its trucks profitably despite rising costs and low scale, in an increasingly competitive market,” Rosner said.
There’s also risk that demand for the Endurance may not be as high as the company believes, he said. During the call with analysts after results, Lordstown did not disclose its order book. Without that and with EV pickup competition from Ford around the quarter, it’s hard to estimate demand for the Endurance, he said.
Lordstown shares have lost more than 70% so far this year, contrasting with gains of around 18% for the S&P 500 index.