Lordstown Motors (NASDAQ:RIDE) stock rose over 10% overnight after a unit of Taiwan’s Foxconn (OTCMKTS:HNHPF) agreed to invest $170 million in the struggling electric vehicle (EV) maker.
The investment will make Foxconn, the contract manufacturer for the Apple (NASDAQ:AAPL) iPhone in China, the largest investor in Lordstown with a 19.3% stake.
The deal brought RIDE shares to $2.10 in overnight trade, a market capitalization of slightly over $400 million.
RIDE on This Mystery Ship
RIDE stock was a hot ticket during the pandemic, rising to a high of $29/share on hopes it could turn an old General Motors (NYSE:GM) factory in Ohio toward the production of electric pickups. It went public through a SPAC that raised $675 million on a market cap of $3.1 billion.
Politicians from both parties endorsed the company. But a short-seller report charged it with phony orders, a failed road test, and self-dealing by top executives.
Since then analysts have been down on the company, and the whole “we’re going to compete with Tesla (NASDAQ:TSLA)” sector of the market. One wrote investors may have been “taken for a RIDE” by Lordstown Motors.
Foxconn has been angling to make electric vehicles since getting Wisconsin state aid for a plant that was first designed for LCDs and was later pitched as an electric vehicle facility. The deal comes just as Lordstown finally starts production of its electric pickup, called the Endurance.
The deal also comes alongside another bottom-line loss. Lordstown said it lost $154 million, 73 cents/share, for the September quarter, and booked no revenue. It said 30 trucks, from an initial run of 500, will be built by year-end, with the rest to come in the first quarter of 2023.
RIDE Stock: What Happens Next?
Foxconn has come in with Lordstown near its lows. If it can help deliver volume production, it could be making a good investment.
But it’s a long shot. Every carmaker around the world is rushing toward electric vehicle production, with a lot more financial and political support than Lordstown has now.
On the date of publication, Dana Blankenhorn held a long position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
