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Understanding Lightning eMotors’ Newly Added Risk Factors

Lightning eMotors (ZEV) is an American commercial electric vehicle company based in Colorado. It also offers electric vehicle charging solutions.

Let’s take a look at the company’s latest financial performance, corporate updates, and newly added risk factors. (See Top Smart Score Stocks on TipRanks)

Q2 Financial Results

Lightning eMotors reported revenue of $5.9 million for Q2 2021. That compared to $0.9 million in the same quarter last year and beat the consensus estimate of $5.34 million. Vehicle sales increased to 36 in Q2 from only nine a year ago.

The company posted a loss per share of $0.79. That widened from a loss per share of $0.10 in the same quarter last year and missed the consensus estimate for a $0.14 loss. Lightning eMotors ended Q2 with $201.9 million in cash and a $168.4 million order backlog.

For Q3, the company anticipates revenue in the range of $4 million to $6 million. It expects to make a loss of $12.5 million to $13.6 million. Lightning eMotors withdrew its 2021 full-year guidance, which called for revenue in the range of $50 million to $60 million, as supply chain challenges have affected chassis production.

Corporate Updates

Lightning eMotors has partnered with Forest River to produce electric shuttle buses. Forest River is a Berkshire Hathaway (BRK.A) company. The deal is valued at about $850 million and involves deploying as many as 7,500 shuttle buses in the U.S. and Canada between 2021 and 2025.

Lightning eMotors has teamed up with Ricardo to produce commercial electric vehicles to sell to fleet operators in the U.K. The arrangement involves Lightning supplying the powertrains that Ricardo will use to assemble the vehicles at its U.K. facilities.

Lightning eMotors and Collins Bus, a subsidiary of REV Group (REVG), plan to produce more than 100 electric school buses over the next few years. Lightning will supply the powertrains and has received an initial order worth $11 million. The electric school buses will be deployed in the U.S. and Canada.

Risk Factors

The new TipRanks Risk Factors tool shows 72 risk factors for Lightning eMotors. Since June 2021, the company has updated its risk profile with 57 new risk factors.

Lightning eMotors cautions investors that its backlog orders may not translate into actual revenue. Therefore, it wants investors to know that backlog amounts may not accurately indicate future earnings.

Lightning eMotors tells investors that it is an early-stage company. On top of that, it has a history of making losses. Therefore, it will incur significant expenses as it establishes its business, so it expects to continue incurring losses for the foreseeable future.

Although it is one of the first-movers in the commercial electric vehicle space, Lightning eMotors says that competition is growing and expects competition to intensify in the future.

The majority of Lightning eMotors’ risk factors fall under the Finance and Corporate category, with 40% of the total risks. That is above the sector average of 38%. Lightning eMotors’ stock price has declined about 40% year-to-date.

Analysts’ Take

After recent discussions with the Lightning eMotors management team, D.A. Davidson analyst Michael Shlisky reiterated a Buy rating on ZEV stock with a price target of $17. Shlisky’s price target suggests 114.38% upside potential.

The analyst noted that his discussions indicated a significant increase in the demand for Lightning eMotors’ products in 2022. Shlisky cited demand from customers such as DHL and significant interest in electric school buses.

Consensus among analysts is a Moderate Buy based on 4 Buys and 1 Sell. The average Lightning eMotors price target of $12.75 implies 60.78% upside potential to current levels.

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