The electric vehicle market as a whole has rapidly progressed from a field of limitless potential to one where investors are starting to demand returns. We’ve seen heavy hitters like Tesla (NASDAQ:TSLA) engage in price cutting, and now, we’re seeing Lordstown Motors (NASDAQ:RIDE) potentially about to close altogether because its key investor is getting cold feet. That disaster was enough to send Lordstown down over 23% in Monday’s trading session.
Those who followed Lordstown Motors stock routinely are likely now wondering why Foxconn is suddenly sufficiently unnerved as to bail out. Lordstown filed a report with the SEC detailing that it may ultimately file for bankruptcy if it can’t come to an agreement with Foxconn over issues in the current Investment Agreement. Further, Foxconn has already dialed back plans to invest another $170 million into Lordstown. Foxconn’s issues stem back to a Nasdaq deficiency notice, which Foxconn refers to in explaining why it’s about to not make a $47 million dollar payment due May 8.
Lordstown isn’t taking this lying down, though; it’s already offered up a public statement that calls Foxconn’s actions “unwarranted,” noting that “Their course of conduct has resulted in material—and what is becoming irreparable—harm to the company.” The deficiency rating refers to Lordstown’s current stock price, which, at $0.40 as of today’s close, was indeed sufficient to be deficient; Nasdaq requires a minimum share price of $1 to stay listed.
A look at the last five trading days for Lordstown Motors stock shows that the problem is much more pronounced than expected. Lordstown has been trading under $1 for the last five days, and today’s drop only made things worse. In fact, a look at the last three months shows that Lordstown hasn’t closed over $1 since March.