Some companies can’t catch a break, and Lordstown Motors (NASDAQ:RIDE) seems to be one of them. The electric truckmaker has steadily declined over the past year, shedding 60% of its value. The company recently saw some slight growth in early 2023, but this growth has not persisted. Today the company announced that it would be pausing both production and deliveries of its Endurance truck due to “performance and quality issues” regarding some of its components.
RIDE stock has been trending downward all morning since the news broke, making it clear that the market is losing what little confidence in the company that it had. Investors had little reason to bet on Lordstown Motors before, but this may be the beginning of the end for the troubled EV producer.
Let’s dive deeper into this story and take a look at what investors can expect in 2023.
What’s Happening With RIDE Stock
Shares actually attempted to rally this morning but to no avail. As of this writing, RIDE stock is down more than 10% for the day, and if its current trajectory is any indication, it isn’t done falling. Lordstown Motors began February by rising slightly, but it seems primed to end it deep in the red. Since this slight rally, RIDE has been relatively volatile but has mostly declined, falling 14% since the month began.
Granted, the company did caution investors that production would likely be slow throughout the early part of the year due to the exact reason behind the production halt. Per Reuters:
“The EV company said in January it expected production to be slow through its first quarter due to supply chain constraints, particularly with respect to the availability of hub motor components.”
While this isn’t surprising, it also isn’t encouraging. Especially as the company hasn’t offered any dates for when it expects production to resume. Supply chain problems have plagued the EV sector for a while, but Lordstown’s peers haven’t been resorting to measures of this magnitude. Fellow electric truck producer Rivian (NASDAQ:RIVN) is exploring innovations to help its vehicles charge faster. And while RIVN stock has struggled lately, multiple experts have named it the next Tesla (NASDAQ:TSLA) or cited it as the most likely company to rival the EV leader.
Most investors likely had little faith in RIDE stock before the production halt. Now they have even less reason to believe it will ever recover.
Lordstown’s Problems Keep Piling Up
Throughout the EV boom, reasons to bet against Lordstown have piled up. In June 2021, as EV stocks soared, a report from short-seller Hindenberg Research accused the company of issuing “largely fictitious” orders. As 2023 began, former CEO Steve Burns offloaded 5 million shares of RIDE stock, even after the Endurance truck had received good news from the U.S. and Environmental Protection Agency (EPA). This led to speculation that the company’s former leader was giving up on it. Now that Lordstown has halted production on the only vehicle keeping it in the game, it’s not hard to see why he would be.
This development is a good reminder of why RIDE belongs on a list of penny stocks to sell before it falls even further. The ride is slowly ending for Lordstown, and investors aren’t likely to wait around to see how it finishes.
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On the date of publication, Samuel O’Brient 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.
