Lordstown Motors Stock Is Tanking. Here’s Why.
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Lordstown Motors’ electric pickup truck Endurance
MEGAN JELINGER/AFP via Getty Images
It’s been a rough ride lately for
Lordstown Motors
—and it isn’t getting any easier.
Monday evening, Morgan Stanley analyst Adam Jonas downgraded shares of Lordstown (ticker: RIDE) to Sell from Hold. He cut his price target to $2 a share from $8.
Lordstown stock is 8.8% to $5.34 Tuesday morning.
S&P 500
and
Dow Jones Industrial Average
futures are both up about 0.8 and 0.7%, respectively.
The new thing troubling Jonas is the company’s planned sale of its Ohio manufacturing facility to
Hon Hai Precision Industry
(2317.Taiwan)—better known as Foxconn. The $230 million cash payment proposed is less than 20% of the value of the plant, according to the analyst.
Lordstown is selling the plant because it needs the cash to bring its EV truck—called Endurance—to market. Limited production of the truck is slated to begin in late 2021. Lordstown’s cash balance at the end of the third quarter is about $225 million, down from about $366 million at the end of the second quarter.
Coming into the day, shares were down about 37% over the past three months and down about 70% year to date. What’s more, shares have dropped about 82% from their early February 52-week high of almost $32.
At the beginning of February, Wall Street was much more upbeat on the stock. Three out of five analysts covering shares rated them Buy. The average analyst price target was $31.60.
Today, six of nine analysts, or 67%, rate shares Sell. The average Sell-rating ratio for stocks in the S&P 500 is less than 10%. The average analyst price target is down to $5.
Several things have shaken Wall Street’s confidence. Since February, the company cut its 2021 vehicle production guidance, announced it would need more cash to fund its truck program development, was targeted by a short seller, and replaced top management.
Write to Al Root at allen.root@dowjones.com