Lordstown Motors ( RIDE -21.65% ) has had its share of issues because it has labored towards beginning manufacturing of its totally electrical Endurance pickup truck. In March 2021, a short-seller report questioned the accuracy of the pre-order numbers it claimed, and its capacity to start manufacturing on schedule later that yr. A few of these claims proved to be correct.
Quick ahead a yr, and the corporate has needed to elevate further capital, push again its manufacturing plans, substitute its CEO and CFO, and shift its technique to contract out its manufacturing. That has all culminated in a share value that has dropped greater than 87% in a yr, together with a crash at this time after the corporate reported its most up-to-date monetary outcomes.
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The corporate’s fourth-quarter and full-year 2021 monetary report contained bits of excellent information. That included a money stability of $244 million, which was properly above administration’s personal prior expectations. And plans to start business manufacturing and gross sales of its Endurance pickup truck are nonetheless on tempo to start within the third quarter of 2022.
With these objects of constructive information, traders is perhaps questioning if it is a good time to purchase Lordstown inventory, particularly contemplating how cheap the shares have gotten.
However after wanting deeper into the corporate’s quarterly report, traders may need to assume twice. Whereas Lordstown expects to provide 500 of its electrical pickups earlier than the tip of this yr, it solely sees a rise to as many as 2,500 extra for 2023. By comparability, electrical automotive start-up Lucid Group began manufacturing late in 2021, and it most lately stated it expects to provide one other 20,000 automobiles in 2022.
That gradual ramp up of manufacturing could also be why Lordstown additionally stated it’s persevering with to work to lift much more capital to fund its operation. The corporate might have salvaged its future with its strategic shift to promote a portion of its manufacturing plant and contract manufacturing of the Endurance to Foxconn. It’s nonetheless working to finalize that association, and even expects to develop on it later with a collaboration settlement for brand new future fashions.
With a market capitalization all the way down to under $500 million, all of the unhealthy information might now be baked into the share value. However with solely a average quantity of income anticipated to return during 2023, traders would probably nonetheless be higher allocating their capital elsewhere.
This text represents the opinion of the author, who might disagree with the “official” advice place of a Motley Idiot premium advisory service. We’re motley! Questioning an investing thesis – even certainly one of our personal – helps us all assume critically about investing and make choices that assist us turn out to be smarter, happier, and richer.
