Today, investors in Lordstown Motors (NASDAQ:RIDE) and RIDE stock are seeing significant losses. Indeed, RIDE stock is currently trading down around 9%. This move comes on relatively average volume, suggesting little in the way of buying support for this early stage EV company.
Indeed, Lordstown has had its fair share of mishaps lately.
The EV truck maker has been hit hard from numerous angles. In particular, a scathing short report from Hindenburg Research led to a sharp selloff earlier this year. The short seller alleged Lordstown had reported preorder numbers that weren’t quite kosher. And recent departures of key executives have essentially confirmed these allegations to be true.
Additionally, increased competition from other truck makers such as Ford (NYSE:F) has picked up. The unveiling of the Ford F-150 Lightning has been met with some serious consumer appetite. Accordingly, investors wonder how much market share will be left for Lordstown, should the company make it to production.
Indeed, the company’s recent going concern statement has provided a warning to investors concerned about this company’s liquidity and solvency position. Another capital raise is likely on the horizon for this company. And in the midst of everything going on, it appears investors may not want to stick around to see what happens next.
However, today, there’s yet another negative catalyst facing RIDE stock. Let’s dive into what’s going on with Lordstown today.
RIDE Stock Down on DOJ Inquiry
Today, the Justice Department announced a probe into Lordstown Motors. This inquiry into Lordstown is aimed at diving into the company’s representations around preorders. Indeed, this saga appears to be far from over. And regulatory oversight is the last thing this company needs right now.
That said, should Lordstown be slapped on the wrist, or otherwise found to have engaged in industry-standard practices, perhaps this stock has been beaten down too far. That remains to be seen. However, the questions surrounding this probe are enough to cause investors to exit this stock en-masse.
Lordstown remains a stock investors will want to take extreme caution with right now. Indeed, there remain too many unknowns with how everything will play out with this stock over the near term. Accordingly, this is a stock that should be on investor watch lists, rather than buy lists, right now.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.