Start your engines, investors: The former DiamondPeak Holdings Corp. has completed its reverse merger with Lordstown Motors Group (NASDAQ:RIDE), meaning that RIDE stock has joined a crowded electric vehicle field that includes Nikola Corp. (NASDAQ:NKLA), Workhorse Group (NASDAQ:WKHS), Nio (NYSE:NIO) and another just-gone-public cvompany, Fisker (NYSE:FSR).
But as you might suspect, none of these EV makers are a thing alike.
Nikola finds itself mired in fighting serious fraud allegations; Workhorse is assembling delivery vehicles at a hampered pace; Fisker has bragged aplenty about its Ocean SUV but so far it’s all talk and no action.
They won’t deliver a single vehicle any earlier than the end of 2022.
Enter Lordstown, which has a story you’ve just gotta love. While GM (NYSE:GM) fumbles its way through a two-left-feet dance with Nikola, Lordstown has taken over the abandoned GM plant in its namesake Ohio city and injected an EV jolt of hope into the local workforce. Can RIDE stock propel the company into the big time? Or even the kinda big time?
RIDE Stock Pulls out of the Driveway
Before RIDE stock landed on the NASDAQ Big Board on Oct. 26, DiamondPeak had a decent run.
Despite a disappointing home stretch, the former DPHC on the NASDAQ exchange finished up by 85% tracing back to Aug. 1. After roughly a month, RIDE has barely any mileage worthy of a track record. But so far it’s built for speed: up 41% and trading at $26.85 per share.
I’m beginning to sound like a broken record on a broken Ford Pinto drive train, but it amazes me how much traction Lordstown and other electric vehicle makers get when they haven’t turned a blessed penny of profit.
Every single EV company mentioned above is in that rose-colored “pre-revenue” stage and one of the very few making a profit, Tesla (NASDAQ:TSLA), had to scratch and claw for years and years to get there. Not that it’s hit some everlasting mother lode; its price-to-earnings ratio is an astoundingly precarious 972-to-1. Buy a dollar of Tesla profit, pay almost a thousand smackers. Such a deal!
And yet, this is the way investors expect the sector to gyrate and Lordstown is no exception. So why should anyone bother to call RIDE stock anything but speculative? The answer, in part, lies in its leadership.
Truly, Lordstown Has Endurance
When GM closed the Lordstown plant after the last Chevy Cruze rolled off the line in March 2019, the story of Blight In the Rust Belt, Chapter 309 made national headlines. But where others saw an empty colossus of 6.2 million square feet, Lordstown Motors CEO Steve Burns saw colossal opportunity.
With Lordstown gone public, he’s set to deliver — as in 27,000 advance orders for Lordstown’s Endurance pickup truck. That bodes well for his RIDE stock believers.
And it sure as hell beats the Nikola prototype that was actually filmed in 2016 coasting downhill as opposed to using a working engine. Disgraced CEO Trevor Milton said at the time, “This thing fully functions.”
Perhaps he meant as a ruse. Good luck with the Nikola deal, GM: With Milton still the dominant shareholder, it sounds like you’ll coast right through.
Compare Trevor the Terrible to Burns, who by all appearances is a roll-up-your-sleeves kind of guy — what with his outdoor jacket vest that makes him look more like an assembly line plugger than a chief executive.
RIDE stock hopefuls, take note: He has a thing going on with the Endurance, a fact made obvious when showed off a prototype at the White House on Sept. 28.
President Trump, in a rare show of dumbfounded amazement, sounded mightily impressed by the 20-inch wheels and 7,500 pounds of towing capacity. Believe it: Such a vote of confidence is not one you can challenge in a state court.
Where Potential Profit Meets Promise
As I’ve noted in previous coverage, 27,000 in sales for the Endurance could lead to a most healthy $1.4 billion in potential revenue. It’s quite possible that tally will jump by the time the vehicle hits the streets in 2021, which could send RIDE stock soaring.
But with the current sales projections based on $100-per-vehicle deposits made by consumers, it’s impossible to say how many will give up their place in line before those shiny new keys get handed out.
Make no mistake: Anyone eyeing electric vehicle companies as investments must do their homework and beware of hyperdrive hype. Not all will survive, just as AMC, Yugo, Studebaker and Oldsmobile are brands forever relegated to the history books. But the significant commitment in resources Lordstown has made to its product spans far beyond a single SUV.
Burns also founded Workhorse Group in 1998, so he’s committed a quarter century to making EVs an everyday reality. Nor did he abandon his original baby, as Lordstown owns a 10% stake in that company.
That’s crucial to note because absent years of analyst projections and data for RIDE stock, leadership matters. I believe Burns is a strong commander, especially given his overarching vision of turning the area surrounding his plant into “Voltage Valley.”
Would I bet on Lordstown? Some stocks look like portfolio winners. Others strive to make a difference for an environment at the crossroads. And still others come with the promise of economic transformation for a downcast local workforce. When you purchase RIDE stock, you get the rare chance to own all three.
On the date of publication, Lou Carlozo held long positions in NIO and TSLA.