Shares of Lordstown Motors (NASDAQ:RIDE) are in the green today after a volatile week for RIDE stock thus far. For starters, the electric vehicle (EV) company reported fourth-quarter earnings yesterday.
For the period, Lordstown posted a loss of 42 cents per share with $0 in revenue. However, the loss came above analyst expectations for a loss of 77 cents per share. On top of this, however, General Motors (NYSE:GM) also recently disclosed that it has sold its 7.5 million shares of RIDE stock.
Here’s what investors should know.
RIDE Stock: General Motors Sells Its Stake
Recently, GM confirmed that it sold its shares of RIDE stock during the fourth quarter. General Motors’ stake was worth approximately $20 million at current prices and represents less than 5% of all shares outstanding.
Originally, General Motors had sold its northeast Ohio plant to Lordstown back in 2019. Then, the legacy automaker invested in Lordstown “to facilitate the sale of the plant.” The legacy automaker invested $75 million into Lordstown in “cash and in-kind contributions.” Since then, Lordstown has run into a plethora of issues and has not yet began full-scale manufacturing. As a result, it agreed to sell the Ohio plant to Foxconn last fall for $230 million.
That said, GM’s sale of RIDE stock shares will not affect the supply agreements between the two companies. In 2020, GM agreed to supply Lordstown with automobile parts, such as “airbags, steering columns and steering wheels.” According to a company filing, the agreement has been renewed until December 2026.
What’s Next for Lordstown Motors?
During its earnings, Lordstown reaffirmed that it expects to begin the production and sale of its Endurance truck this year. The EV maker expects to sell 500 units in 2022 and 2,500 units during 2023. The company is also working to finalize the sale of its Ohio plant to Foxconn. After the sale, the company plans on developing “new vehicles in collaboration with Foxconn based off the MIH platform.” Lordstown President Edward Hightower had the following to say:
“We have a unique vehicle that will offer a superior combination of handling, traction control, torque and turning radius that we are confident will be appreciated by our customers. With fewer moving parts than more conventional propulsion systems, we also believe the Endurance will have advantages in overall maintenance costs.”
In the meantime, CEO Dan Ninivaggi has also reassured investors that the company has enough funds to supply production. The company ended 2021 with a cash balance of $244 million.
On the date of publication, Eddie Pan did not hold (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.