Electric vehicle (EV) maker Lordstown Motors (NASDAQ:RIDE) stock is trending on social media, and its shares are down 45% in early trading after the EV maker filed for Chapter 11 bankruptcy. The firm decided to take the step after its deal with Foxconn, the huge Taiwanese manufacturer, fell through.
RIDE has also sued Foxconn, also known as the Hon Hai Technology Group (OTCMKTS:HNHPF), for allegedly violating their contract.
RIDE Stock: More About Lordstown’s Moves
In conjunction with the bankruptcy filing, Lordstown is looking to sell its commercial electric pickup truck, the Endurance, and “related assets” to another commercial entity.
Lordstown’s lawsuit against Foxconn was filed today in a Delaware bankruptcy court. The company explained that it is alleging in the lawsuit that Foxconn committed “fraud and willful and consistent failure to live up to its commercial and financial commitments to” Lordstown.
CEO Edward Hightower had this to say in a statement:
“Despite our best efforts and earnest commitment to the partnership, Foxconn willfully and repeatedly failed to execute on [our] agreed-upon strategy, leaving us with Chapter 11 as the only viable option to maximize the value of Lordstown’s assets for the benefit of our stakeholders.”
Additional Information About Lordstown and Foxconn
Foxconn had invested over $50 million in Lordstown in exchange for 8.4% of RIDE stock. But Lordstown contends that Foxconn was supposed to buy more shares, while the Taiwanese firm is failing to help Lordstown develop additional EVs as it had promised.
For its part, Foxconn told Reuters that it was Lordstown that had failed to uphold the deal.
Foxconn’s American depository shares (ADRs), trading on the over-the-counter (OTC) markets under the HNHPF ticker, are up almost 1% this morning. HNHPF stock is up about 15% year-to-date (YTD). In comparison, RIDE stock is now down over 90% YTD and set to drop further.
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On the date of publication, Larry Ramer 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.
