Lordstown Motors-Bankruptcy Possibility
Lordstown Motors, the US electric truck manufacturer, saw its shares drop by half on Monday after major shareholder Foxconn alleged that the company breached their $170 million investment deal. In an SEC filing on Monday, Lordstown warned that “there is substantial doubt regarding our ability to continue as a going concern.” Without a resolution with Foxconn, other funding, or new partners, the company may be forced to file for bankruptcy or cease operations.
Lordstown said it was in talks with Foxconn to seek a resolution but rejected Foxconn’s allegations of a breach of agreement, claiming that the claim was based on a delisting notice sent by Nasdaq to the Ohio-based automaker. Lordstown said last month that the notice had no immediate impact on its stock listing and that it had until October 16 to regain compliance with Nasdaq’s rules.
Foxconn did not immediately respond to a request for comment on the matter. The Taiwanese contract manufacturer had struck a deal in November to take a near-20% stake in Lordstown Motors for up to $170 million. In May, Lordstown sold its Ohio factory to Foxconn for $230 million, excluding assets such as the hub motor assembly and battery pack lines.
Lordstown Motors purchased a former General Motors small car assembly plant and equipment for $20 million in Ohio after the Detroit automaker closed it in March 2019.
Lordstown Motors is not the only electric vehicle start-up to face financial problems. Other EV start-ups like Nikola and Faraday Future have also faced investor scrutiny and failed to deliver on their promises. Lordstown’s woes highlight the intense competition and pressures faced by start-ups in the rapidly evolving electric vehicle industry.
Investors are increasingly focused on the ability of electric vehicle companies to deliver on their promises and compete against established automakers, with many companies trading on expectations of future success rather than current profitability. The challenges facing Lordstown Motors underscore the need for transparency and accountability in the electric vehicle industry, as investors seek to navigate a rapidly changing landscape.
RIDE Stock Analysis
According to two analysts, the average analyst target price for Lordstown Motors Corp over the next 12 months is USD 0.75, and the average analyst rating is Sell. Stock Target Advisor’s own analysis of the company is Bearish based on 1 positive signal and 6 negative signals. As of the last closing, Lordstown Motors Corp’s stock price was USD 0.52, and it has changed by +8.30% over the past week, -17.91% over the past month, and -76.01% over the last year.
