Lordstown Motors Tanks 20% on Lower-Than-Expected Vehicle Production

Shares of Lordstown Motors (NASDAQ: RIDE) were down 19.9% on February 28 and lost another 3% during the after-market hours, after the full-size electric pickup truck manufacturer disclosed a much lower-than-expected Endurance vehicles production outlook, along with its fourth-quarter earnings, which exceeded estimates.

Q4 Results

The company reported an adjusted loss of $0.42 per share, which was much better than the street’s estimated loss of $0.73. The company is yet to report any revenues.

In Q4, the company incurred $85 million in operating expenses and $30 million in capital expenditures towards the commercial launch of Endurance.

Further, Lordstown raised fresh capital of $182 million, including $150 million from Foxconn in equity and down payments under the asset purchase agreement, as well as $30 million from equity issuances.

The Road Ahead: Lower-than-expected Endurance

Looking ahead, the company reaffirmed to begin commercial production and sales of the Endurance during the third quarter of 2022.

However, it forecasts Endurance commercial production and sales of 500 units in 2022 followed by 2,500 units in 2023. These numbers fall far short of the targets laid out when the company went public in 2020.

Initially, Lordstown projected 2,000 Endurance pickups in its first year, followed by 32,000 units during the first full year of production.

Management Comments

Lordstown CEO, Dan Ninivaggi, commented, “In the fourth quarter and into 2022, we continued to build and test pre-production vehicles that we are using to complete a variety of validation activities needed to achieve full homologation. Despite ongoing challenges securing parts and other supply chain issues, we continue to target commercial production and sales in the third quarter of 2022.”

Speaking on the need to raise additional capital to fund the commercial launch of the Endurance, Lordstown CFO, Adam Kroll, cautioned, “However, we understand that raising additional capital in the near term is critical to the successful launch of the Endurance and the execution of our operating plan.”

Analysts Recommendation

The Street is bearish on the stock with a Moderate Sell consensus rating based on 2 Sells. The average Lordstown Motors price target of $3.25 implies 26.46% upside potential to current levels. Shares have lost around 88% over the past year.

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