Investors have not been subtle in showing how disappointed they are with the new production plans put in place by
Shares of the electric vehicle start-up fell double-digit on Tuesday – and Wall Street piled on with a downgrade and lower price targets.
Lordstown’s first quarter earnings report, released Monday night, is what catalyzed the decline – just over 11% in midday trading, compared to small increases for both
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The automaker doesn’t have any sales yet, so the losses aren’t as big as upcoming production. On that front, however, Lordstown management slashed this year’s numbers for its all-electric Endurance light van and told investors the company would likely need more money in the future.
In response to the update, RF Lafferty analyst Jaime Perez downgraded the title to Hold from Buy. Its target price fell from $ 35 to $ 9 a share. Perez set out his reasons in a Tuesday report: “The lower price target reflects our lower income estimates for 2021 and 2022, which assumes that ramping up production will depend on Lordstown’s ability to mobilize more capital. ” Other issues he listed – higher start-up costs, higher parts costs, and supply shortages like semiconductors and plastics.
Goldman Sachs analyst Mark Delaney also lowered his price target from $ 10 to $ 8. It evaluates hold stocks. He also cited higher costs and delays in his report. “We believe there were additional negatives in the report regarding the company’s ability to meet its financial goals,” the analyst wrote.
Lordstown projected $ 118 million in sales in 2021 and $ 1.7 billion in sales in 2022 during the merger process with a special purpose acquisition company in 2020. Delaney projected around $ 22 million in sales in 2021 and $ 535 million in sales in 2022.
Morgan Stanley analyst Adam Jonas also has a price target of $ 8, down from $ 12. His rating, however, is Sell. He was also not impressed with the report. “While there is a glimmer of strategic value, we believe investors are exposed to inordinate business and market risk,” Jonas wrote. It is not certain that Lordstown will be successful in the long run.
There are still bulls. BTIG analyst Greg Lewis rates Buy stocks and has a price target of $ 20, down from the $ 40 he set in early March. Lewis was happy that Lordstown had carried out major crash tests, although the tests cost more than expected.
Lewis also pointed out that a strategic investor – even another automaker, also known in the industry as an original equipment manufacturer – might be willing to take a stake. “We believe [one] could include existing suppliers, a new entrant in the space, an existing OEM without an EV footprint, or even a customer. ”
An investor might be needed to get the stock out of its funk. Shares are down 74% from their 52-week high. The need for cash to achieve profitability will keep investors away, at least until more cash arrives.
Write to Al Root at [email protected]