Lordstown Motors Corp. has stuck to its timeline to have its first electric pickup trucks rolling off the factory floor later this year, but the company “has a long road ahead” in terms of competition and communicating a further action plan.
That’s from Joseph Spak at RBC Capital, who attended a company event shortly after the resignation of the electric-truck maker’s top executives last week. Lordstown Motors’
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founder and Chief Executive Steve Burns and Chief Financial Officer Julio Rodriguez have resigned, with interim executives appointed.
Spak said that recently appointed Executive Chairwoman Angela Strand reiterated the year-end target, but did update the company’s strategic plan. The company is likely to leave that update for later in the summer, the analyst said in a note late Tuesday.
“We think the new plan will emphasize new revenue streams (i.e. selling hub motors/battery packs/other vehicle types) as the theme of flexibility (plant/platform) was prevalent through our visit,” he said. “Strand communicated the decades of auto experience at (Lordstown Motors) and an increased focus on transparency, the latter being imperative towards rebuilding Street credibility.”
Spak kept his rating on the company’s shares at the equivalent of sell with a $5 price target, implying a 52% downside from Tuesday’s prices.
In addition to the resignations, Lordstown last week sought to clarify that its order book, while an “indication of demand” for the Endurance, was not binding.
Lordstown also has added a “going concern” warning to a recent filing, and recently released the result of an internal investigation about allegations by short seller Hindenburg Research, which in March published a scathing report on Lordstown and accused the company of inflating its demand and production capabilities.
On the plus side, Spak said, Lordstown Motors owns a “massive,” albeit mostly empty, plant.
“The facility is an asset for (Lordstown Motors),” especially since the company got the plant for around $20 million. The factory and equipment “could become important if used as collateral for a loan,” the analyst said.
Lordstown Motors went public in October through a reverse merger with a blank-check company.
Its Ohio plant belonged to General Motors Co., making compact cars for the legacy auto maker, and was slated to close as part of GM’s focus on more popular and profitable trucks and SUVs. It was then sold to Lordstown Motors.
Shares of Lordstown have lost nearly 49% this year, and are holding on to a 1.7% gain in the past 12 months. That compares with advances of around 13% and 36% for the S&P 500 index
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in the same periods.