Shares of Lordstown Motors (NASDAQ:RIDE) have been rallying strongly in recent days. But is RIDE stock worth buying today? Let’s look at where the rubber meets the road, off and on the price chart, then determine if investors should pull the plug or steer clear of the action.
Electric vehicle (EV) stocks have been charging higher. And RIDE hasn’t been immune to the rapid momentum that’s overtaken the group. In the two weeks since Pfizer’s (NYSE:PFE) vaccine bombshell, Moderna’s (NASDAQ:MRNA) compelling drug update and now AstraZeneca’s (NYSE:AZN) third dose of good news, shares of RIDE have lifted over 80%.
Even the best vaccine-related ‘stay away’ stocks such as Delta (NASDAQ:DAL) or Royal Caribbean (NYSE:RCL) are in the rearview mirror of Lordstown’s performance. But the gains in RIDE are mostly in the middle of the pack within an overheated EV market teeming with diverse and alluring propositions of the next, next big thing for investors.
Workhorse Group (NASDAQ:WKHS). Fisker (NYSE:FSR). Hyliion (NYSE:HYLN). Plug Power (NASDAQ:PLUG). Nio (NYSE:NIO). They’re among up-and-coming EV stocks sporting double-digit, but lesser gains than RIDE shares for the period.
Yet within this very crowded market, Li Auto (NASDAQ:LI), XPeng (NYSE:XPEV), Electrameccanica (NASDAQ:SOLO), and Switchback Energy (NYSE:SBE) have outpaced RACE with triple digit performances since early November.
Environmentally-friendly tech is driving today’s investors into a feeding frenzy. So, what within this large and obviously growing market is RIDE’s unique proposition, other than having a cool-sounding ticker? I honestly can’t say.
Lordstown Has Red Flags
Yahoo Finance describes RIDE as an automotive company “… which develops and manufactures light duty electric trucks. It primarily develops Endurance, an electric full-size pickup truck.”
What Yahoo Finance can’t say is much about RIDE’s fundamentals. They’re non-existent at this point in time. It’s a concept company though, right? At least that’s the pitch being sold to investors with shares fetching more than $4.5 billion in market cap. If, however, that’s not warning enough, the words “buyer beware” are apparent for other reasons.
Bottom-line, Lordstown’s checkered “do-si-do” managerial warning signs thoughtfully addressed by InvestorPlace’s Thomas Yeung, are troubling. So is the company’s recently re-worded and deflated pre-orders for its Endurance truck which are now called “non-binding production reservations,” as no cash has changed hands.
Lastly, with RIDE stock having the ignominious blessing of a less-than-upright Clown & Chief now exiting stage left, there are sufficient red flags to avoid this EV play.
RIDE Stock Daily Price Chart
Source: Charts by TradingView
EV stocks could be called a dime a dozen these days. Importantly though, it’s also what’s lurking under the hood which makes some of these companies less attractive than others. And those warnings become particularly damning in a momentum phase like today, which is prone to ending very badly for many of those stocks.
Technically, there’s not much to say other than RIDE is consolidating within a “V-shaped” base structure. Legend cautions those patterns as being less sustainable than other chart formations. Maybe. Unequivocally though, EV peer Nikola (NASDAQ:NKLA) should serve as a warning.
NKLA was the market’s hottest EV stock earlier this year before Wall Street woke up to less-than-good behavior by a company’s top brass. Sound familiar? It should at this point. Shares of Nikola tanked by more than 80% prior in the aftermath.
Still and not to judge, if you’re prone to not looking both ways before crossing the street, I’d stress buckling up with Lordstown’s very well-traded and liquid options and walk away safely with a fully-hedged position in RIDE.
On the date of publication, Chris Tyler held, directly or indirectly, positions in Nio (NIO), Plug Power (PLUG) and Electrameccanica (SOLO ) and their derivatives, but no other securities mentioned in this article.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.