“Lordstown Week” has a regal sound to it, but considering the issues at EV truck startup Lordstown Motors (RIDE), the title it has given to its meet-and greet-event sounds like it could belong in the Emperor’s New Clothes.
The company is currently beset by a number of issues which have sapped investors’ confidence. Revelations that some of its top brass offloaded shares ahead of the company’s first public quarterly report in March and the recent resignation of the CEO and CFO have raised eyebrows. What’s more, the company has also said it lacks the necessary funds to ramp up production of its EV pickup the Endurance or even keep the doors open.
In an attempt to rebuild credibility, the company has welcomed investors, analysts and customers to see its manufacturing plant, meet with team members and take a ride in the beta vehicles.
RBC analyst Joseph Spak attended the event. The analyst said recently appointed Executive Chairwoman Angela Strand reiterated the target to produce 1,000 trucks by the end of year but “did not update the strategic plan.” Spak thinks an update might arrive in Q3, “likely balanced by capital raise.”
So, what else did Spak learn on the tour? The analyst notes the plant is an impressive asset which Lordstown got for $20 million. With equipment mentioned by the plant managers to have a “$3bn total replacement value,” Spak thinks it could “become important” if used as collateral for a loan.
After speaking to prospective customers, Spak says several had questions regrading hub motors and maintenance/repairs, while a rep from a “bigger fleet” signaled they are evaluating “all EV options.”
As far as the Endurance itself, Spak took a ride and compared it to the one taken in Ford’s F-150 Lightning.
“While both were betas,” Spak said, ”The comparison wasn’t close, in our view, as Ford had a more refined (Endurance still missing traction control), better performing, and capable vehicle. That said, the Endurance can still improve and there were some impressive features, including turning radius.”
Summing up, the analyst “continues to believe Lordstown has a long road ahead.” As such, Spak rates RIDE an Underperform (i.e. Sell) along with a $5 price target. With shares already down by 45% year-to-date, the figure implies another 54% drop from current levels. (To watch Spak’s track record, click here)
The market’s collective wisdom agrees. RIDE has a Moderate Sell consensus rating, based on 4 Sells, 3 Holds and a single Buy. At $9, the average price target indicates ~18% downside from the current share price of $10.98. (See RIDE stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
