Shares of Lordstown Motors Corp. plummeted Feb. 28 after the manufacturer of electric pickup trucks said it planned to sell about 500 units this year, far below what analysts had been expecting. The company’s executives also said they need to quickly raise about $250 million to ensure they can follow through on their launch plans.
“We are entering a critical phase for the company,” CFO Adam Kroll told analysts on a conference call after Lordstown said it had booked $3.5 million in revenues in the fourth quarter and incurred losses of $81.2 million – an improvement from the nearly $96 million of losses in the last three months of 2020. The company finished 2021 with $244 million of cash and equivalents on its books, down from $630 million a year earlier but above where executives had projected. Executives raised $182 million in capital during the quarter, with $150 million coming from Foxconn parent company Hon Hai Technology Group, which agreed last November to buy the former General Motors Corp. plant in Lordstown for about $230 million with an eye to bringing to the facility other manufacturing lines.
In the last three months of 2021, Foxconn made its $100 million down payment on the plant acquisition and purchased $50 million worth of Lordstown shares. The company also paid Lordstown another $50 million as part of the factory deal in late January.
But what the two companies have not yet done is finalize contract manufacturing and joint product development agreements that would open up to Lordstown a broader supplier base, lower its costs and, CEO Dan Ninivaggi told analysts, “greatly enhance” its ability to secure funding – much of which would go toward hard tooling.
“Quite frankly, I am disappointed that we're not further along,” Ninivaggi said. “The relationship with Foxconn is very positive and the discussions are ongoing, but we need to bring that to a conclusion.”
On the conference call, Kroll said raising $250 million would get Lordstown “through the year and into 2023 and allows us the time to prove that we can actually execute and then we deserve people's capital for other things.”
The new sales targets for the Endurance – which will have a payload capacity of 1,200 pounds and towing capacity of 8,000 pounds – laid out by Ninivaggi and his team fall well short of the Street. Reuters reported that Mark Delaney at Goldman Sachs had been modeling more than 2,200 deliveries this year and 10,000 in 2023. Ninivaggi said the plan is to sell to a small number of fleets as part of longer-term relationships.
Heading into the last hour of regular trading Feb. 28, Lordstown shares (Ticker: RIDE) were down nearly 22% and changing hands around $2.50. They have now lost more than 60% of their value since late August, lowering the company’s market capitalization to about $480 million.
