2021 is proving to be a bumpy trip for Lordstown Motors (RIDE). In a tough as-it-is setting for all method of latest vitality automobile gamers, the corporate can be beneath SEC investigation following a brief vendor’s accusations of fraud. The shares have declined by 55% for the reason that flip of the yr, and the newest developments have solely accelerated the rout.
Lordstown reported Q1 earnings on Monday, and being a pre-revenue firm, traders had been eager to hear excellent news relating to the event of its flagship electrical truck – the Endurance.
Well, there have been some positives to observe. Beta testing is nearing completion with 48 of the 57 Betas on the highway. The Endurance has additionally made it by means of preliminary crash testing, July ought to see pre-production kick off and full manufacturing remains to be slated to start in September.
However, these positives had been drowned out by the corporate stating that due to a lack of capital, it now expects to produce at greatest just one,000 autos this yr as an alternative of the earlier goal of two,200 autos.
Although administration did add that ought to they safe extra funding, they might nonetheless meet the earlier goal.
At the low finish, BTIG’s Gregory Lewis thinks Lordstown would require $130 million to have the opportunity to pull the feat off.
The lack of capital is due to an upward adjustment for 2021 OPEX (working bills). The firm now expects to spend ~$340 million, $115 million above earlier estimates. While Lewis thinks there’s a affordable rationalization for the rise, it’s also “another likely source of stock weakness.”
“The OPEX raise was largely driven by increased insourcing (frame tooling, a second battery line, and increased hub motor capacity), which, though we believe it was a smart long-term move, requires upfront capital,” the analyst mentioned. “Due to this increased CAPEX, management noted their plans to raise more capital (we are thinking $200-$500M in debt capital), as they expect 2021 year-end cash liquidity of $50-$75M (ex-incremental capital).”
Accordingly, Lewis slashed his RIDE value goal by half, from $40 to $20. Nevertheless, the shares’ sharp drop means there’s 121% upside from present ranges. Lewis’ ranking stays a Buy. (To watch Lewis’ observe file, click here)
Amongst Wall Street’s cadre of analysts, Lewis is on his personal. With three extra Holds and a pair of Sells, the inventory has a Hold consensus ranking. As new Wall Street value goal revisions have are available, at $9.83, the common value goal now implies one-year returns of ~8%. (See RIDE stock analysis on TipRanks)
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Disclaimer: The opinions expressed on this article are solely these of the featured analyst. The content material is meant to be used for informational functions solely. It is essential to do your individual evaluation earlier than making any funding.