Lordstown Motors (NASDAQ:RIDE) stock is falling hard on Tuesday after the troubled electric vehicle (EV) company filed for bankruptcy.
Specifically, Lordstown filed for Chapter 11 bankruptcy protection to restructure its business. The company is also seeking out a buyer for its Endurance vehicle and assets connected to it. The company also expects the filing to help with a new lawsuit against Hon Hai Precision Industry (OTCMKTS:HNHPF).
That lawsuit was just announced today and covers the global technology company and some of its affiliates, such as Foxconn. Lordstown takes issue with “Foxconn’s fraud and willful and consistent failure to live up to its commercial and financial commitments.” The company says this resulted in “material damage to [Lordstown] as well as its future prospects.”
Edward Hightower, President and CEO of Lordstown Motors, said the following about the lawsuit:
“Despite our best efforts and earnest commitment to the partnership, Foxconn willfully and repeatedly failed to execute on the 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. We will vigorously pursue our litigation claims against Foxconn accordingly.”
What This Means for RIDE Stock
RIDE is in for a rough time now that the company has filed for bankruptcy. The move is likely going to damage investor morale, which may result in shareholders selling RIDE stock. That already seems to be happening with some 1.2 million shares trading this morning. For comparison, the company’s daily average trading volume is about 1.4 million shares.
Additionally, the bankruptcy filing may result in shares of RIDE stock being delisted from the Nasdaq. If that happens, it could result in more damage to the share price as investors abandon the EV maker.
RIDE stock is down 58.8% as of Tuesday morning.
Investors looking for more of the most recent stock market news will want to stick around!
We have all of the hottest stock market coverage traders need to read about on Tuesday! Among that is what’s moving shares of View (NASDAQ:VIEW) and Surgalign Holdings (NASDAQ:SRGA) stock, as well as the biggest pre-market stock movers this morning. You can find all of that news at the following links!
More Stock Market News For Tuesday
- Why Is View (VIEW) Stock Up 11% Today?
- Why Is Surgalign Holdings (SRGA) Stock Up 10% Today?
- Today’s Biggest Pre-Market Stock Movers: 10 Top Gainers and Losers on Tuesday
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On the date of publication, William White 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.
