How low is too low? That’s the question that long-beleaguered supporters of electric vehicle upstart Lordstown Motors (NASDAQ:RIDE) are asking. Once hailed as an innovator in the burgeoning electric pickup truck space, RIDE stock eventually became a cautionary tale about entering the public arena via a reverse merger with a special purpose acquisition company.
Still, RIDE stock managed to ride the coattails of positive industry news. Earlier this month, Goldman Sachs sent some welcome ripples in the space when its analysts disclosed an anticipation of “significant growth in EV adoption particularly beyond 2030.” Long story short, the financial institution sees electric and hybrid vehicles accounting for nearly half the cars on the road by 2040.
Such a forecast is significant because, while sales of EVs have accelerated worldwide, based on the latest data, they still only represent about 2.5% of global car sales. Therefore, a jump to nearly 50% on our roadways in less than two decades seems lofty, considering the infrastructural challenges that lie ahead. Goldman isn’t in the business of publishing numbers for the fun of it, so this could mean legitimate downwind benefits for RIDE stock.
However, since the time of the big bank’s report, Lordstown shares have been struggling mightily, shedding double-digit percentage points. True, the broader implications are encouraging for RIDE stock. But given the company’s missteps and financial losses, there’s no guarantee that Lordstown will be around to benefit in 20 years, let alone 10 or even five.
Typical of SPACs, Lordstown traded pre-merger at around $10 a pop. At its peak, RIDE stock briefly touched $31 before tumbling its way down to its current price below $3. Basically, RIDE became a 10X investment but in reverse.
Though the price point will attract battle-hardened speculators, increased competition in the EV arena will make it difficult for Lordstown to compete. Plus, infrastructural inadequacies impose challenges that all sector players must contend with. Thus, RIDE stock doesn’t appear to be a high-probability trade.
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On the date of publication, Josh Enomoto 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.